In the latest episode of the Strong Source podcast, we had the pleasure of speaking with Marc Perathoner, the Head of Commodities Risk Management at FrieslandCampina, one of the largest dairy companies in the Netherlands. Marc’s journey from a small town in the Dolomites, Italy, to the trading floors of Chicago, and eventually to his current role in the dairy industry, is nothing short of fascinating.
From Ski Slopes to Trading Floors
Marc’s career path is as unique as it is inspiring. Initially a professional skier, Marc’s life took a dramatic turn following a serious accident that ultimately changed his trajectory. This event led him to the United States, where he completed a finance degree in Salt Lake City. Despite starting his career at Goldman Sachs, it was his passion for trading that saw him transition from the structured environment of investment banking to the more dynamic world of commodities trading. As Marc recalled, he “always had a passion for markets and trading,” and skiing serendipitously connected him to someone who helped him break into the trading world.
Surviving and Thriving in the Trading World
Marc shared his experiences on the trading floor of the Chicago Board of Trade, where he honed his skills in risk management and developed his unique trading style. He noted that “in the end, all markets are driven fundamentally,” underscoring the importance of understanding market dynamics and finding your own approach to trading—something that cannot simply be taught, but must be discovered through experience. This adaptability was crucial, especially when transitioning from floor trading to electronic trading, a shift that significantly impacted his career.
The Transition to Dairy Commodities
After the CME shut down the trading floors, Marc made the move back to Europe, where he found a new challenge in the dairy industry. At FrieslandCampina, Marc applies the risk management principles he developed on the trading floor to the dairy commodities market, which he describes as both fragmented and complex due to its unique supply chain dynamics. For Marc, “it’s always about risk management,” emphasising that a trader must first and foremost be a great risk manager, a principle he carries into his current role.
Understanding the Dairy Market
During our discussion, Marc delved into the intricacies of the dairy market, highlighting how only a small percentage of global milk production is traded internationally. This creates distinct challenges and opportunities, as even a small imbalance in supply and demand can cause significant price turbulence. According to Marc, “the dairy industry is fascinating because of its fragmented market and the unique supply chain dynamics,” making it a complex yet intriguing sector to navigate.
Risk Management and Market Dynamics
Risk management remains a cornerstone of Marc’s approach, especially in the volatile dairy market. FrieslandCampina uses various tools and strategies to manage risk, including regular risk position reports, VAR limits, and trade meetings to align on market views and desired risk positions. Marc stressed that “volatility is a sign of a healthy market,” and that the key is staying in the game long enough to take advantage of it.
The Role of Technology and Algorithmic Trading
The conversation also touched on the impact of technology and algorithmic trading on commodity markets. While Marc acknowledged the challenges posed by algorithmic trading, he also recognised its role in enhancing market efficiency. He noted that “algorithmic trading has made markets more efficient,” but it also requires traders to adapt and refine their strategies to stay competitive in an increasingly automated world.
Career Advice for Aspiring Commodity Traders
Drawing from his extensive experience, Marc offered valuable advice to young professionals aspiring to enter the commodity trading industry. He encouraged them to develop a genuine interest in markets, stay disciplined, and continuously seek knowledge. Marc advised that aspiring traders should “develop a real interest in markets and trading” and emphasised the importance of finding one’s own trading style while always prioritising risk management.
Final Thoughts: Navigating the Ever-Changing Waves of Commodity Trading
Marc’s journey is a testament to the value of perseverance, adaptability, and continuous learning in the ever-evolving world of commodities. Whether you are a young professional looking to break into the industry or a seasoned trader, there is much to learn from Marc’s story and his approach to managing risk and market dynamics. As Marc wisely put it, “markets are always evolving, and so should you… stay curious, stay disciplined, and always be prepared for the unexpected.”
Listen to the full episode to hear more about Marc’s journey and his insights into the world of commodities trading:
What is the Strong Source Podcast?
Our mission with the Strong Source podcast is to educate and inform, by creating a community where experts and guests from the entire commodity industry can share their unique perspectives. Martijn Bron, ex-cacao trader, and Alexander Sterk, ex-dairy trader and founder of Vesper, have a deep-passion for this industry, which inspired
