A Conversation with Pedro Nonay

From trader to teacher

You've had an exceptional career as a trader: twenty-one years with Cargill, eleven with Louis Dreyfus, and two with Solaris, all in senior trading or management positions. Do any highlights come to mind out of that wide and long career?

I was the first member of my family who did not join the family agricultural business, which was already a century-old business. Cargill gave me a tremendous foundation in the commodity trading business. Dreyfus allowed me to be more of a manager and a business builder. Solaris allowed me to be entrepreneurial, taking advantage of my previous experiences and trying to visualise the future of the business.

Which did you enjoy the most?

I have lived in five countries and enjoyed every one of them! I have worked for three different companies and enjoyed every one of them!

Cargill was a period of discovery during which I developed the skills I needed for trading and discovered a new world. After Cargill, it was more about developing executive skills and finding a vision. However, the deep learning experience and the people I met in all three companies were unforgettable. Without Cargill, I would not have been able to do the others, but I enjoyed the journey in the following steps as well.

What different commodities have you traded, and which was the most challenging?

I have mainly traded grains and oilseeds, but also fertilisers and molasses. Right. There are all kinds of vegetable oils and seeds in veg oils. Intellectually speaking, oilseeds are the most complex, but complexity is always an opportunity to make things simple. It was the most challenging for me.

Which commodity do you prefer?

My background and fascination with geopolitical issues make me feel attached to wheat. Fragmentation in the world wheat trade has led to two tiers of trading: the global traders and the regional champions. The international trading companies have lost market share in wheat to smaller specialised companies in different origins and destinations.

Russia accounts for almost 30 percent of the total world wheat exports. The country has a tremendous influence in the market, but international players cannot participate in that flow. I expect this situation will endure. This fragmentation is even growing. We've had decades of globalisation, and now we're getting fragmented, if that's the correct word. It has consequences on trading and shipping, behaviours, and even ethics. It is continuing to have a significant impact.

But it's not just Russia. China is buying more beans from Brazil and less from the US and is worried about tariffs and export bans. Are politics shaping the global agricultural trade more than in the past?

Yes, the world has split into two blocks. Some talk about the South versus the North, while others talk about the East versus the West. I favour the differentiation between a Western mentality and a BRIC+ mentality. We are in a new world order.

You've had a fantastic career. Would you expect a young person joining the business now to have a similar career?

There are tremendous opportunities for the new generation in our sector, but it depends on their attitude. We in the northern hemisphere mostly live within our comfort zone, while those in the southern hemisphere are more ambitious. Attitude is going to make the difference.

You mention attitude. What other factors, characteristics, or character traits make a good trader: ambition, risk appetite, and curiosity?

Common sense is essential, and by that, I mean asking, "Does this make sense?" Don't take things at face value or fall prey to conventional thinking. Always ask that next question.

Other critical pillars include curiosity, respect for others, and a periscopic holistic view from different angles. Don't stay deep and comfortable in your submarine. Raise the periscope and look all around.

What about relationship skills? Communication skills have always been essential for merchants and traders, but we're entering a world of AI and platforms. Are relationship skills still critical?

They are fundamental if you want to understand and communicate with other people. Most successful people are good communicators – and not just in our sector.

How would a young person reading this know if they have what it takes to be a good trader?

I have hired many people in my life with many different characteristics. There is no one model. When I interviewed a candidate, I always tried to decide whether they were the type of person who, when watching a football match, would be interested in the coach's strategy and tactics, not only how beautiful a goal is. Everyone is born with specific skills, but you must develop those skills. Trading is a science but also an art.

How important is an analytical mind?

Essential! Numerical skills are critical, but I encourage people to be interdisciplinary. The best trader that I have ever seen had a history degree. Your background doesn't matter if you have analytical skills.

Is trading a young person's game? Are traders like soldiers? And if they are, is it a function of risk assessment and appetite?

No, there is no age for being a trader. However, vision is not enough; you must implement that vision. You are a dreamer if you don't execute your vision. Perhaps people are less willing to implement their vision as they age.

Let's move on to what you do now. How do you spend your days?

First, I advise different companies on logistics, distribution and trading. Second, I do business consultancy on specific sectorial issues. Third, and this is what I enjoy the most: I teach. It pays the least, but it doesn't matter. Money is not the priority on this one. It's how I can give back to society what I got from society.

I currently lecture in different business schools and lead the agri commodity programme for managers at the Spanish University of IEB in Madrid. I also give tailor-made programmes for specific big companies. I call this the Trading Academy and adapt the programmes to different companies' requirements and needs.

What do you specialise in when you're teaching?

We teach people to think like traders regardless of their businesses. For instance, a procurement team in any sector can benefit from thinking like a trader regarding fundamental supply demand and risk, all within the macro environment. We teach people to structure their thinking to identify the indicators that will change the game. A trader's way of thinking applies to any business in life.

What's the toughest part about teaching?

There is no tough part of teaching. The only challenge I often face is when people think in black and white. There is frequently no yes or no answer to a question. The answer is usually, "It depends." The world is not black or white, but it is not grey either. It is glorious technicolour.

The most challenging part of my work is understanding the programme requirements when I tailor-make a program for a specific company. I can build the course structure only when I fully understand a company's needs.

Do you work alone?

I work with a close-knit group of colleagues and friends. I have the luxury of having these tremendous professionals who help me structure and deliver a programme. Our objective combines academic passion, intellectual curiosity and profound experience. We want to bring value to the participants of our courses.

One thing that bothers me is that I am an old guy who writes about business for young people. How do you and I stay relevant and up-to-date?

It is essential to keep in contact with people. You must talk with them – network with them. You can't learn everything from the Internet. I learn enormously from my students. That's the thing about teaching. I learn as much as I teach.

What about employees? How do they stay relevant during their career? Should they take time out for further education, or should companies offer more in-house training?

Both alternatives are valid. However, our mindset must be to learn constantly, not just when we are on an in-house or external course. Learn from your colleagues. Admit your weaknesses and work to improve them.

But don't concentrate on your weaknesses. Concentrate on your strengths. Successful people leverage and grow their strengths, which differentiates them from less successful people.

Will AI help?

Traders spend 70 per cent of their time collecting and organising information and data and 30 per cent of their time thinking. AI will allow traders to think 70 per cent of the time and collect and organise data and information 30 per cent of the time.

Pablo González, my co-author of 'Thinking 2020', often recalls what his father used to tell me, "Pedro, you work so hard you don't have time to make money." AI should allow traders to work less hard and hopefully make more money! It is a common problem.

The other common problem is that you don't have time to sharpen your sword when you're working so hard. This leads to burnout. I genuinely hope AI will give us all more time to think.

Which university courses would you recommend a person to study to get into commodity trading?

As I mentioned earlier, it is not a critical issue. As a manager, I hired people with different educational backgrounds on purpose, but they all needed to think critically and analytically.

You must find out if trading is your thing. Take your time to look for an internship. If you know someone in the sector, seek them out as a mentor.

What three pieces of advice would you give to a young person on their first day on a trading desk?

• Behind every problem, there are many opportunities.

• Take the time to specialise in something that differentiates you from others.

• You have two ears and one month. Listen twice as much as you talk.

© Commodity Conversations® 2024

My latest book, Commodity Professionals - The People Behind the Trade, is now available on Amazon.