INTRODUCTION
Wholesale commodity trading and risk management can encompass any number of business processes and strategies, from brokered trades in which the buyer purchases some quantity of commodity and then immediately resells it at the same point for( hopefully) a profit – to multi-commodity transactions involving global supply chains, transformations, and complex financial hedging strategies. Vendor provided software to service this wide-ranging market, commonly known as Commodity Trading and Risk Management or CTRM software, will similarly vary in possible functional coverage, with some CTRM solutions addressing specific functional components( such as deal capture or risk analysis for a specific commodity), while others will attempt to model and provide wide-ranging functional coverage for all possible commodity classes and the unique physical operations associated with each and every possible combination in between.
Given this, the Commodity Trading and Risk Management( CTRM) software category is very difficult to define except in the broadest of terms. When the term“ CTRM” was first coined, it was essentially used to expand the breadth of the software category known as Energy Trading and Risk Management( ETRM). Both terms broadly mean the same thing, with ETRM reflecting software solutions that address the capture, position management and accounting for any wholesale energy trade; and CTRM reflecting a wider reach( including energy in some cases) and encompassing other commodity categories including ags, softs, and metals.
In the last few years, CTRM has been increasingly regarded as a component of an even larger software category called Commodity Management( CM), further muddying the classification of the types of software that address the needs of the wholesale commodity marketplace. Commodity Management solutions are most commonly utilized in the mid- and downstream
© Commodity Technology Advisory LLC, 2017, All Rights Reserved.
commodity markets, including food processing and packaging companies, agricultural merchants, and manufacturers. Additionally, there are a number of terms used to describe different aspects of Commodity Management such as‘ ERP for Commodities’.
An as analyst organization, ComTech must classify the nature and capabilities of the various vendor-supplied products( and their markets) in order to help buyers better understand what solutions may be available to satisfy their needs. As the markets for these products continue to expand and mature, and as the software vendors seek additional market share, the interactions and / or overlap in capabilities among the wide range of products servicing the breadth of the wholesale commodity marketplace grows as well, making such classifications more complex. As such, this paper will provide our view of the various definitions that apply to these markets and seek to help both buyers and vendors understand the emerging terminology in use today.