Commodity Trading Houses

Traders earn on the difference between where a cargo is and where it is worth more, arbitraging location, time and quality, and they add storage, blending and freight to widen that spread. Gross margins often sit under 2 percent of turnover and the balance sheet is funded almost entirely with short-term bank credit against inventory, so a trading house is a credit business as much as a commercial one. The firms stay private, take on political risk that listed producers decline, and only became visible when Glencore listed and when sanctions cases reached court. The literature covers Marc Rich's methods and sanctions dealing, the grain houses that handled the Soviet purchases of the 1970s, and a modern history of the sector from Blas and Farchy.