Commodity trading reached new heights in 2022 and 2023. Record volatility, shifts in global trade routes, and significant changes to counterparty creditworthiness all contributed to a dramatic increase in industry margins. The result' Commodity traders saw more than $100 billion EBIT in 2023.1Joscha Schabram and Roland Rechtsteiner, 'How to capture the next S-curve in commodity trading,' McKinsey, February 23, 2025. Not everyone thrived in these years. Many factors likely contributed to how players performed, such as risk appetite and access to capital. But the majority of those that banked record profits excelled in one critical area: balancing the classic risk triangle of market, credit, and liquidity risks, as well as working capital (see sidebar, 'Understanding the commodity trading market'). Instead of viewing each of these scarce resources in isolation, they monitored and steered them jointly'the same way they manage their P&L and other performance metrics. This allowed them...
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