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What is a Grain Broker?
Mary McMahon
Mary McMahon
A grain broker is someone who facilitates the purchase and sale of grain. Like brokers in other areas of the financial industry, grain brokers serve as a point of connection between buyers and sellers, working to get the best deal for all parties involved. The size of a grain brokerage can vary, depending on where it centers its operations.
Grain brokers may work at local markets and they can also work at large commodity exchanges, which are often located in urban areas near railway hubs to make trade easier. When a farmer approaches a grain broker, the broker takes a sample of the farmer's grain. The grain is inspected for quality and stored in the brokerage. The broker in turn meets with people who want to buy grain, providing them with access to the sample and negotiating a price which will be amenable to both parties.
To become a grain broker, it is usually necessary to have a bachelor's degree in a field related to finance or agriculture. Some have degrees in public relations and communications, because communication is key to being an effective broker. Brokers can work for a brokerage under more experienced brokers or they may operate independently. On a local level, a single broker may be able to handle the day's business, while brokers who work with commodity exchanges usually need the support of a large office with numerous personnel.
The grain broker typically takes brokerage fees for every deal arranged. These may include flat fees per unit of grain in addition to percentage fees based on the amount of the deal. The broker discloses these fees up front so that buyers and sellers can decide whether or not the fees are acceptable. Brokers who charge high fees may also offer special services as an incentive for people who might otherwise turn down a relationship with the broker on the basis of cost.
Working as a grain broker requires a knowledge of the commodities market as well as the ability to predict, at least to some extent, market movements. A broker who does not think ahead can end up with unsatisfied clients such as buyers who pay too much for a grain which falls out of favor or is produced in surplus or sellers who are angry that their grain sold at a price lower than it deserved. However, even with the best skills and years of experience, a grain broker ultimately cannot make predictions about market movements with confidence.
Mary McMahon
Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a PracticalAdultInsights researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.
Learn more...
Mary McMahon
Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a PracticalAdultInsights researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.
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![Barley, a type of grain.]()
By: 1999istekBarley, a type of grain. -
![A grain broker can work with individual farmers or with a larger exchange.]()
By: Dusan KosticA grain broker can work with individual farmers or with a larger exchange. -
![Grain merchandisers are often used as brokers for grain buyers and sellers.]()
By: ChrisVanLennepPhotoGrain merchandisers are often used as brokers for grain buyers and sellers. -
![A grain broker will often take a sample of a farmer's grain when working with individual farmers.]()
By: Johan LarsonA grain broker will often take a sample of a farmer's grain when working with individual farmers.
Discussion Comments
@geekish - I honestly don't know how difficult it is, but from looking at a few websites about commodity trading it seems you are exactly that - only a commodity trader. It becomes your niche rather than something you do part of the time.
Right now I am enjoying learning about investing in businesses so I think I will stick to that as opposed to trying to learn about this venue of trading grain and other commodities!
@amysamp - I agree, the financial markets are incredibly expansive. Then just add in the fact that there are different markets such as the NYSE and the NASDAQ and now there is another market within these markets?
I think the commodity market which includes jobs such as a grain broker sounds interesting. Is it difficult to become a commodity trader?
I have just found yet another area of finance for me to learn about. Grain, really? Who knew?! I was interested in just the stock market, and thought it would be pretty easy to get a handle on. However, I am just learning the opposite.
Since learning about the stock market, which I thought was just about businesses and choosing which businesses I thought would do well based on their products or services and business model. But I keep finding new things, such as commodities which include grain, ethanol, and other everyday items!
I can't believe there is such a thing as a commodity broker who deals specifically with grain! But I guess what I am learning with the financial markets is to never be surprised, and that there is always something new to learn.
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