CTRM (Commodity Trading and Risk Management) software is specialized software designed to help companies manage the complexities of buying, selling and trading commodities, moving and delivering those commodities, and mitigating associated risks.
Commodity traders, processors and purchasers use to manage physical trades, accounting, derivative trades, position, mark to market, origination, logistics, risk management, procurement, planning and scheduling. CTRM software can be used across asset classes, including agriculture (coffee, cocoa, grains, oilseeds, sugar, rubber, palm, etc.), energy (crude and refined products, natural gas, natural gas liquids, liquefied natural gas, power, coal, renewables), and metals (base metals, refined, steel, scraps, and concentrates).
CTRM solutions vary depending on which commodities are traded, which assets are employed in the business, where those assets are located and what the company’s business strategy and associated business processes are.
Can’t I just use an ERP system for commodity management?
Many ERP vendors like SAP, Oracle and others, are large, well-established and already deployed within organizations. They provide coverage across the business with lots of implementation experience, and if you are a commodities company already using an ERP to manage accounting or other functions, extending its use sounds logical.
But while many companies try to adopt an ERP system for commodity management, very few of these customized solutions are successful. Companies wind up spending significantly more money than needed on a highly customized system that is impossible to upgrade, expensive to maintain, and difficult to enhance. In contrast, CTRM systems were developed specifically to address the needs of commodity management and can scale with your business.
Why doesn’t ERP work for commodity management?
Commodity management is an intricate and complex process, and using a system designed for generic business purposes to accommodate all the nuances of commodity management just doesn’t work. While CTRM software and ERP have many common ingredients, they are fundamentally different. The architecture of commodity trading risk management software was built with the specific needs of commodities companies in mind - while ERP systems cannot handle all the unique situations that can occur in commodity management - like, for example, pricing.
Pricing
Unlike most manufacturing businesses where the price of goods is known throughout the supply chain, unpriced and partially priced positions cause core differences in the way a commodity is bought, sold, shipped, stored, invoiced, accounted for, and valued throughout the supply chain. The way commodities are priced and valued sits at the architectural centerpiece of what a commodity management system needs, and this impacts practically everything throughout the commodity supply chain.
If there is no defined price, creating a contract in an ERP system is challenging. There are also multiple price types (unpriced, index, NPE, etc.) and exchange types that provide creative market prices (hourly, daily, monthly, etc.). ERP cannot handle provisional, prepayment, and final invoices or deal with mark-to-market valuations and constantly changing market prices.
What about spreadsheets?
Spreadsheets unfortunately remain the solution of choice for many commodity trading companies because they are convenient, easy to use and inexpensive.
In the past, many companies viewed CTRM software as expensive and inconvenient, requiring months to install, significant work from the IT department, and user training was perceived to take time, interrupt work and create new challenges for users. But this is a legacy view, and not at all representative of today’s CTRM systems.
Why change if spreadsheets work so well?
Spreadsheets may seem like an inexpensive and convenient option for commodity management, but they have major disadvantages:
A better way
In the end, while ERP systems may offer broad functionality, they simply weren’t built to handle the complex, fast-moving nature of commodity markets. CTRM software, on the other hand, was purpose-built for this world—capturing every nuance of commodity trading and risk management. With the right CTRM solution, companies can manage everything from physical and derivative trades to logistics, procurement, mark-to-market, and planning in a single, integrated platform. Real-time insights, accurate data, and on-demand reporting ensure smarter decisions and faster execution. It’s not just a different approach - it’s a better way to operate in today’s volatile, high-stakes trading environment.
Want to learn how Quoreka’s platform approach to CTRM surpasses ERP to help your firm seamlessly manage trade lifecycle, market volatility, logistics and regulatory demands? Schedule a demo today and download our whitepaper to learn more about why choosing the right system is no longer optional for your firm - it’s a strategic imperative.