The commodity trading industry has accumulated as much as $120bn in cash reserves after five years of record growth, building a war chest that the biggest traders are set to reinvest to strengthen their dominance.
The industry reserves, estimated at between $70bn and $120bn in a study by consultants Oliver Wyman, are the result of a huge rise in profits across almost all parts of the industry.
Gross profits from commodities trading activities — including by banks, hedge funds, independent traders and asset-backed businesses such as BP and Shell — rose from about $36bn in 2018 to a record $148bn in 2022 largely because of fallout from the war in Ukraine, the study found. In 2023 Oliver Wyman estimates gross profits or margin — the amount made on trades before deducting costs such as tax, salaries and bonuses — hit $105bn, down about 30 per cent year on year, but still about double historic levels.