Which IT Solutions Are Used by Grain Trading Leaders

Globalization and the increasing complexity of international wholesale trade, along with rising volatility and decreasing margins in the grain market, have driven the development of specialized software that grain traders use to manage their businesses. This refers to the so-called CTRM systems (Commodity Trade and Risk Management).

Today, no major grain trading company operates without such programs. The software functions as a central information system for grain traders, helping them conduct efficient trading in constantly changing market conditions.

A whole industry has emerged within the global IT sector for the development and support of such software, which has been growing dynamically in recent years after a downturn that began in 2014 due to the commodity market crash, as reported by Dmytro Mykhalchuk, founder and CEO of GrainTrack, in an article for the business publication Kapital (Kazakhstan).

In 2019, it marked 25 years since the first CTRM system appeared. The first such system was created back in 1984 in the United States by Allegro Development. Initially, it was designed for trading energy resources and metals, and was intended for energy and gas companies.

The product generated interest in the market, and soon the American company faced competition. Today, there are more than 100 CTRM manufacturers worldwide. For over a decade, their products have been used by companies trading in grain. The largest producers of specialized software are EKA, OpenLink, Allegro, Aspect, Brady, and others.

The main suppliers and consumers of software are concentrated in the U.S. and Western Europe, accounting for around 80% of the market. In this case, the market follows the consumer: the headquarters of leading trading houses such as Archer Daniels Midland (ADM), Bunge, Cargill, and Louis Dreyfus, which control almost 90% of the global grain market, are located in these regions.

Post-Soviet countries, including Kazakhstan, belong to regions where the use of CTRM is developing dynamically. Faster growth is constrained by the isolation of local grain markets in terms of trading activities and business practices.

Today, few service providers are willing to invest the necessary resources to ensure that software meets the unique needs of grain traders in each country in the region.

In 25 years, this type of software has undergone significant evolution. Thanks to its integration capabilities with various services and programs (accounting, stock exchanges, business news feeds, long-term weather forecasting programs, etc.), CTRM systems are becoming powerful analytical tools that help grain traders conduct their business while avoiding unnecessary financial losses due to inefficient management decisions.

The growing demand for this product is clearly demonstrated by financial indicators. According to a recent report from the American analytical organization Com Tech Advisory, the global CTRM production and service market is expected to grow by $1.74 billion by the end of 2019. The industry as a whole has been growing since 2016, after the 2014 downturn caused by the global commodity price collapse. According to the organization’s forecast, the market will reach $2.04 billion annually by the end of 2023.