How much am I worth? Senior commodity trader, leading institution

A panel of headhunters gives its assessment of typical London pay packages: Base: 105,000 for five years plus experience; bonus: highly variable and discretionary but typically 100% - 150%.

Common sense - and simple physics - demand that what goes up must also go down and nowhere has this been truer than in the world of commodities. A few years ago, with prices of just about every traded commodity at or near rock bottom, prospects for many commodity traders looked bleak; today, with energy prices close to record highs, metals performing well and even 'softs' and agricultural products seeing strong price increases, the boot is very much on the other foot.

Mark Tomlinson, of Tsunami Trading Solutions, says new entrants are coming onto the market: Gazprom, for example, is setting up a new trading division with a team that should eventually number 21, whilst the recruitment of emissions traders is also active ahead of the start up of the European Emissions Trading Scheme that goes live in January. Meanwhile, investment banks and hedge funds that previously stayed away from commodities are looking at them anew, with trading in commodity derivative products a key growth area.

'We're seeing renewed interest from investment banks in particular, with even smaller outfits wanting some of the action,' Tomlinson says, adding that private commodity trading companies - such as Trafigura, Glencore and Vitol - have also been very active.

Yet if the market is buzzing, with institutions rushing to fill gaps in their teams to alleviate what Tomlinson says is in many cases an acute talent shortage - this has not translated into higher salaries. Not yet anyway.

'The demand for quality individuals is clearly there but institutions are not paying whatever it takes to get the right people,' says Trish Collins, head of the Exchange Consulting Group. She argues that instead of paying a premium, institutions have been relying on headhunters to advise them of their needs and to seek out individuals with the core talents.

'Recruiters want people with expertise, who can demonstrate they can make money in easy and difficult markets, who have seen pain,' she says.

Collins says the two key recruiting areas have been at the junior level - of mathematically capable people in their mid 20s, with a year or two's experience behind them - and those who have been through the pain barrier, have longevity in the market and bring with them a good understanding of the fundamentals as well as good technical knowledge.

So what sort of salaries are being paid?

At the top end, Collins suggests somebody with 5 years plus experience should typically average between 90,000-120,000; a junior, by contrast, should command between 40,000-55,000, with bonuses for both categories described as 'highly variable', sometimes paid as a percentage of the total amount traded, sometimes reflecting how the team or institution has performed.

Tomlinson suggests a body with 3-5 years experience will receive a basic of anywhere between 50,000-90,000 and a variable, discretionary bonus: investment banks pay between 100-150% of base salary, private commodity firms and hedge funds also pay handsomely, with utilities and oil majors inclined to be rather less generous.

And over the medium to long term? Although Newton's Law remains inviolate, liquidity and volatility will continue to characterise commodity prices, with almost nobody expecting a crash - which can only be good news for traders' wage packets.

Figures and commentary by the Exchange Consulting Group and Tsunami Trading Solutions