Energy traders, flush with cash, are moving into crops and metals

Companies diversifying into other commodities.

After making more money than ever in the past few years, some of the world’s top energy traders are using the cash to expand in metals and agriculture.

The bumper profits reaped from trading oil and gas have given them cash to invest and opportunity to diversify into other commodities. Since last year Gunvor Group, Hartree Partners and Vitol hired crop or metals traders.

While it’s not the first time major energy merchants have leaned into such markets, there are several reasons their interest is rising now.

The energy crisis and Russia’s war in Ukraine fueled volatility that traders crave and underscored how one commodity can impact another — such as high gas prices curbing metals output and boosting fertilizer costs. Plus, metals like copper and lithium are crucial to the energy transition away from fossil fuels, and a U.S. renewable diesel boom is boosting crop demand, helping to connect commodity markets.

“It’s sensible diversification,” said Manish Marwaha, a commodities consultant and former strategy director at agri giant COFCO International. “Margins and revenues in agricultural and metals trading have proven resilient in recent years.”

A move into other commodities markets also makes sense for some major energy traders looking to recoup revenues lost from broadly exiting the Russian oil business, Marwaha said.

Energy trading — oil, gas, coal or power — largely remains the core focus of the top independent merchants. The push for now is on trading metals and crop derivatives — rather than dealing in physical supplies — to tap volatile prices.

Among recent hires, Ian Oxley joined Geneva-headquartered Gunvor from Freepoint Commodities late last year as the energy-trading giant takes a closer look as base metals. Gunvor also brought in Brad James and Jonathan Smith from Citigroup to trade agricultural derivatives as part of a clutch of appointments, according to people familiar with the matter.