2015-2020 CTRM Market Outlook
Commodity Technology Advisory LLC (ComTech), the leading analyst firm covering commodity trading and risk management (CTRM) technology markets, has recently completed its biannual in-depth review of the CTRM software market space in order to compile an estimate of the size of the global CTRM technology market and prepare an outlook for growth across the various component submarkets that comprise it. Readers of this report should be aware that in the development of this data, as in past years, we must delineate boundaries for the companies and applications reflected in the scope of the analysis.
‘CTRM’ is a term that has been widely adopted by many technology companies. “Traditional” CTRM vendors have been expanding their reach outside of what has been widely and traditionally accepted as core CTRM through acquisition of applications that would commonly be viewed as tools for managing and optimizing supply chains and as such, without adjusting vendor reported results to eliminate these non-CTRM capabilities, we would be overstating the size of the market directly related to commodity trading and risk management capabilities. As such, for this report, ComTech has utilized a fairly rigid view of what capabilities are encompassed within the bounds of CTRM.
Value Study: Investing in E/CTRM in Turbulent Times
The only constant is change echoes an astute observation by the Greek philosopher, Heraclitus, some 2,500 years ago. Those of us who are engaged in the world of commodities are continually reminded of the accuracy of his observation, particularly recently, as commodity prices collapsed led by crude oil. In fact, our industry is continually impacted by changes in the regulatory environment, supply/demand balance, global economic environment, technology developments, political intervention and more.
Recently, BP noted in its annual Energy Outlook1, “Today’s turbulence is a return to business-as-usual. Continuous change is the norm in our industry. The energy mix changes. The balance of demand shifts. New sources of energy emerge, such as shale gas, tight oil, ultra-deepwater oil or renewables. Economies expand and contract. Energy production and consumption are affected by disruptions, from wars to extreme weather. New policies are created to address climate change or bolster energy security.“
Change is the very lifeblood of the commodity trading world, creating opportunities for profit for those who are swift and responsive enough to act. Good traders make money in up or downwards moving markets, provided they are armed with up-to-the-minute data and the analytical tools needed to identify, analyze and manage their trading decisions. However, depending on market direction, other market participants might be caught in a more problematic situation and experience cash flow and/or profitability issues should price movements undermine their naturally long (producers) or short (consumers) positions. Nonetheless, if the company has the right tools at its disposal to track up-to-the-minute changes, and properly and effectively manage its exposure to those changes, then value can be protected and in some situations, profits might be made.