The following are the most commonly used global  business terminologies in the meat industry aimed to provide a guide to buyers and importers
ASWP –Any Safe World Port.

It is quite common for commodity sellers to offer delivery to any safe world port of the buyer’s choice Allocation Commitment Letter

The Allocation Commitment Letter for Brazilian Agricultural Ministry is issued by the Chamber of Commerce of Brazil. This is the official confirmation that the allocation is dedicated and belongs to the buyer. For same reason it is prohibited by law to issue the Allocation Commitment Letter without a (non-operative) guarantee for the payment.

In the past a lot of futures were sold twice or more based on intensions from the buyers. This way the value of the Allocation Commitment Letters was jeopardized by “good intensions” that were never executed in real life. By end of day the Allocation Commitment Letters the same way ended up as “intensional”.

Today, this has all changed; today, the Allocation Commitment Letter is a true commitment. And ONLY the Chamber of Commerce of Brazil is entitled to issue such. The Allocation Commitment Letter is the ONLY genuine and real Proof of Product for futures in sugar.

BCL – Bank Confirmation Letter

This is a letter from the Buyer’s bank confirming the buyer’s ability to meet a certain level payment requirements. This letter states that the Buyer has sufficient funds to cover the cost of the order. It should however be understood that this does not imply any guarantee of payment.
The BCL might be addressed to a second party (usually a specified seller) or addressed to the first party holding the money on account

A SWIFT MT199 or MT799 is a SWIFT message issued by buyer’s bank to seller’s bank confirming that buyer has sufficient funds to enter a specified business transaction. It might indicate the funds are being blocked for the transaction for a specified period of time. MT799 is a much stronger commitment than MT199.

A Soft Probe Authorization is an authorization given from one party (usually the buyer) to another party (usually the seller) to contact the first parties bank to obtain information about funds on the party’s account.

BG – Bank Guarantee

A Bank Guarantee (more properly called a Banker’s Guarantee) is a banking arrangement whereby a bank substitutes its creditworthiness for that of its customer. Unlike an L/C which is intended to be paid, a BG is a contingent obligation. “Contingent” means “depending on the happening of an event, which may or may not occur” and 99% of the time it is not paid because the event does not happen. Every day, banks big and small issue BGs on behalf of their customers for a variety of mundane purposes. A BG is never issued for the bank’s own account, always on behalf of its customers, and the final liability falls on the customers. The most common type of BG is performance-related, in which a bank tells the beneficiary if the customer does not do this or that, the bank will pay.

BL – Bill of Lading

This is the receipt given by the shipping company when goods are loaded on board the vessel. This is an important document and gives title to the goods. It is needed by the buyer to obtain the goods from the port.
The Clean on Board Bill of Lading is issued by the freight forwarder (logistics company, shipping company, carrier or transporter) and confirms the specification of the shipment received:
⦁ Date of Issue, i.e. the date the freight forwarder received the shipment
⦁ The Content (in descriptive words what it is)
⦁ The Quantity, i.e. weight and/or volume)
⦁ The Consigner (the shipper)
⦁ The Consignee (the legal recipient of the shipment)
⦁ The place (port of loading) of handing over the shipment to the freight forwarder
⦁ The place (port of destination) of handing over the shipment to the (legal) recipient
⦁ The terms of carriage, i.e. the liability of the forwarder
⦁ The value of the shipment
⦁ Eventually the cost of transport
⦁ Any eventual conditions for handling over the shipment to the consignee, ex. requirements to identification
If the Bill of Lading is “negotiable”, it enables the holder of the Bill of Lading (i.e. the legal recipient of the shipment if not stated differently) to modify the point of destination after the shipment has been handed over to the transporter.
By default a Bill of Lading is “non-negotiable”, i.e. the point of destination may not be altered after the goods have been handed over to the freight forwarder.
Note that the consigner and/or the consignee might be different from the actual seller/buyer of the goods – for different reasons.

Contract (SPA)

The Contract or Sales & Purchase Agreement (SPA) is the agreement between seller and buyer on the transaction in all details. A signed contract is a legally binding agreement between the seller and the buyer. The seller is required to supply under the specified price and terms, and the buyer is equally required to buy at the price and terms.

Each party is entitled to ask for compensation from the other party if the contract is not executed according to each party’s obligations. The contract might specify the compensation for each party under different conditions or it might be up to the court of law to decide which compensation will be suitable in the case of one party not complying with the requirements outlined in the contract.

A valid Contract must as minimum include:
⦁ Issuing date
⦁ Validity in time
⦁ Seller identified by name, full address, company registration number and contact information
⦁ Buyer identified by name, full address, company registration number and contact information
⦁ Full and detailed specification of the product
⦁ Contract Quantity
⦁ Origin
⦁ Shipping terms
⦁ Price
⦁ Payment terms
⦁ Any other mandatory terms

CAD – Cash Against Documents

This acronym stands for “Cash Against Documents”, and is indicative of a type of sale where title documents are only transferred when payment is made.

CIA – Cash In Advance

This acronym stands for “Cash In Advance”, which is a type of sale in which the full amount of the purchase price of an order must be paid upfront. This is not standard procedure in the sugar trading industry, and it is not advised that any buyer pays upfront for sugar that has not yet been shipped.

Cash Transfer (TT, MT103)

A T/T Telegraphic Transfer by MT103 is a SWIFT message transferring money from an applicant in one bank to a beneficiary in another bank; usually from an account in the first bank to an account in the other bank; however it is also possible to transfer money using MT103 without the applicant nor the beneficiary holding accounts in the involved banks; in this case the transfer of money is very similar to transfer of money by ex. Western Union, i.e. from a sender to a receiver without any relation with Western Union in general.

Note that MT103/23 Conditional means that the MT103 has an active article 23 specifying the required identification of the beneficiary. Conditions in regards to presentation of (other) documents than documents identifying the beneficiary is NOT possible using MT103 but requires the use of Documentary Letter of Credits (see above).

T/T by SWIFT MT103 payment is usually executed in one of two ways:
⦁ Advance Payment. Buyer pays full or partial payment upfront in advance to the seller. Of course this payment method is more risky for the buyer than DLC or SBLC+TT and is ONLY recommended for existing customers. However, advance payment in full or partial form will typically make it possible for the seller to offer the buyer a further discount.

Certificate of Origin

Certificate of Origin (CoO) is issued by Chamber of Commerce (or other valid authority) of the country of origin certifying the origin of the goods, any parts thereof and any component being part of the goods whether being altered or processed in the preparation of the final goods. It does not certify the origin of the material being used in the preparation that is not part of the final product; for example fuel being used for powering the machinery or the labor actually preparing/producing the goods.

For a product to “originate” from a specific country all components as part of the final product must originate from that country and all parts must have been prepared/produced in that country. Otherwise the CoO will state that the product has been “assembled” only but not produced in that country. Or the CoO will state that for instance the Sugar has been refined in Brazil based on Canes from Venezuela.

Certificate of Quality & Quantity (Q&Q)

Certificate of Quality & Quantity (Q &Q) is issued by SGS (or similar) based on inspection of the shipment as the shipment is handed over from the consigner to the freight forwarder and includes a Certificate of Analysis and a Certificate of Weight together with a visual description of the shipment and the loading process certifying the conditions, quantity and quality of the goods when handed over to the freight forwarder.

Certificate of Analysis (CoA)

Certificate of Analysis (CoA) or Certificate of Quality is certifying the chemical composition of the commodity in regards to the listed parameters for analysis. The analysis is done by SGS contracted laboratory.

The CoA is issued by SGS or similar based on samples taken by SGS etc. or upon samples forwarded to SGS etc. The CoA will indicate how many samples have been taken and the size of each sample.

Certificate of Weight (CoW)

Certificate of Weight (CoW) or Certificate of Quantity is certifying the weight of the shipment. The CoW is usually issued by SGS or similar based on inspection of the shipment.

The methodology for certifying the weight will depend on the shipping mode. If the shipping mode is containers then the measurement of weight will be conducted by weighing the containers before and after loading of the commodity into the container.

If the shipping mode is bulk shiploads the measurement of weight will be conducted by weighing the bags or big bags. The Certificate of Weight will indicate if all units have been measured or the total weight is an estimate made on samples and calculations.

CFR – Cost and Freight

The price includes the cost of the goods, loading, and freight to the named Destination Port. This does not include unloading charges.

CIF – Cost, Insurance and Freight

This is the same as CNF, but also includes insurance to the named Destination Port, e.g. CIF Dubai.

Confirming Bank –

A confirming bank is a bank which agrees to honor a bank guarantee or letter of credit issued by another bank.

Certificate of Radiation

A certificate of radiation certifies that the shipment is within internationally acceptable radiation levels.

Crop Certificate

A crop certificate states the crop from which the sugar was produced. This allows the sugar to be traced right back to the exact point of its origin where it was grown.

DC – Draft Contract

A draft contract is an initial contract which is drawn up and sent from the Seller to the Buyer. The Buyer has the opportunity to make amendments and send it back to the Seller for consideration. This process continues until both parties are satisfied with the terms of the contract.

DDP – Delivered Duty Paid

All delivery charges and duties to the named destination are paid by the exporter, e.g. DDP New York

Documentary Letter of Credit (DLC, RDLC, IRDLC)

A Documentary Letter of Credit (DLC) is a highly structured SWIFT message. The SWIFT numbers are MT700 continued by MT701 – used by banks having an agreement on exchange of DLCs (i.e. has “key” to each other) – or MT710 continued by MT711 – used by third party banks – without such agreement.

A DLC has up to more than 70 different articles (“tags”) specifying different aspects of the credit making a DLC both highly structured and at the same time highly complex. Each article and the valid options are defined in ISBP 745 authored by ICC. The complexity is the main reason why some sellers will charge more for using DLC over SBLC+TT.

According to the latest version UCP by ICC UCP600, all DLCs are Irrevocable even not stated or even stated differently. A DLC cannot be revocable.

A DLC is a documentary credit, which means that payment is entirely and solely conditional upon presentation of documents pre-listed in the DLC and their pre-listed contant/value. The bank will not as such go out and check if the commodity outlined in the DLC is actually present somewhere in the physical world.

Documentary Letter of Credits might have the following main extensions:
⦁ DLC at Sight – means a DLC issued for future payment.
⦁ Revolving DLC – means a DLC with repeated payment ex. every month on the same conditions.
⦁ Transferable DLC – allows the DLC to be transferred from one bank to another bank (max. one transferring bank).
⦁ Divisible DLC – allows partial shipment and related payment.
⦁ Confirmed DLC – means that the advising (“receiving”) bank or a third party confirming bank is confirming the credit to the beneficiary, which implies that the confirming bank guarantees the credit toward the beneficiary.
⦁ Deferred (usance) DLC – means that the payment is executed a specified number of days after documents are presented.
⦁ Advance Payment (Red Clause DLC) – allows (partial) advance payment without presentation of documents.
⦁ DLC by Negotiation – means that the Nominated bank pays the beneficiary AFTER approval of payment by the Issuing Bank, Confirming Bank and Transferring Bank but BEFORE getting paid thru the lines back to the Issuing Bank or Reimbursing Bank.
⦁ DLC by Payment – means that the Nominated bank will not pay the beneficiary UNTIL it has received payment thru the lines bank to the Issuing Bank or Reimbursing Bank.
⦁ Back to back DLC – means that one DLC received is the basis of issuing another DLC without the first DLC being transferred. Bank to bank DLC is much more flexible than Transferred DLC but also more risky for the bank doing the back to back setup, which means that the bank most likely will ask the applicant to apply for (full) credit line for the “next” DLC.

Parties/roles involved in DLC:
⦁ Applicant – the party applying for the letter of credit, i.e. usually the buyer.
During Issuing the Credit.
⦁ Apply for DCL at the Issuing Bank.
During Execution of Payment
⦁ Reimburse/pay the Issuing Bank.
⦁ Issuing (Opening) Bank – the bank issuing Eventually:the credit on behalf of applicant, i.e. usually the applicant’s/buyer’s bank.
During Issuing the Credit
⦁ Opens the DLC to the Advising Bank or Transferring Bank – using SWIFT MT700/701 or if third party bank MT710/711.

⦁ Requests confirmation from Confirming Bank by sending the DLC by SWIFT MT700/701 or MT710/711 to the Confirming Bank.
By SWIFT MT740 requests for Irrevocable Reimbursement Undertaking (IRU) from the Reimbursing Bank.
During Handling of Documents
⦁ Approves or disapproves payment in response to compliance or discrepancies advised by Negotiating Bank – eventually after examining the forwarded documents.
⦁ Advises payment by:
⦁ SWIFT MT752 to the Transferring Bank or Nominated Bank.
⦁ SWIFT MT756 to the Reimbursing bank.
During Execution of Payment
⦁ Reimburses by SWIFT MT202 the Nominated Bank OR the Reimbursing Bank.
⦁ Gets paid by the Applicant.
⦁ Reimbursing Bank – the bank doing the payment on behalf of Issuing Bank. Might be required if the Issuing Bank requests the Transferring or Advising Bank to confirm the DLC.
During Issuing the Credit
⦁ Acknowledges or rejects the request for reimbursement undertaking – as reply to the request from the Issuing Bank.
⦁ Advises the Transferring Bank, Confirming Bank or Advising Bank of irrevocable reimbursement undertaking.
During Handling of Documents
⦁ Gets advise from Issuing Bank to reimburse the Transferring Bank or Nominated Bank.
During Execution of Payment
⦁ Reimburses by SWIFT MT202 the Nominated or Transferring Bank.
⦁ Asks Issuing Bank for reimbursement.
⦁ Transferring Bank – the bank transferring the credit from issuing bank, i.e. reseller’s bank. The transferring bank as such has no obligations towards the beneficiaries as the credit is being “redirected”
During Issuing the Credit
⦁ Accepts or reject by SWIFT MT730 to the Issuing Bank to transfer the DLC to the Advising Bank.
⦁ Transfers the DLC by SWIFT MT720/721 to the Advising Bank.
During Handling of Documents
⦁ Approves or disapproves payment in response to discrepancies advised by Negotiating Bank – eventually after examining the forwarded documents.
During Execution of Payment
⦁ Reimburses by SWIFT MT202 the Nominated Bank.
⦁ Pays the 1st Beneficiary.
⦁ Confirming Bank – the bank guaranteeing the payment to the beneficiaries.(If no confirming bank then the issuing bank is the guarantor.)
During Issuing the Credit
⦁ Accepts or rejects to confirm the DLC by replying to the request from the Issuing Bank or Transferring Bank.
⦁ Advises the Tranferring Bank or Advising Bank of the confirmation – if approved – by forwarding the confirmed DLC using SWIFT MT700/701 or MT710/711.
During Handling of Documents
⦁ Approves or disapproves payment in response to discrepancies advised by Negotiating Bank – eventually after examining the forwarded documents.
During Execution of Payment
⦁ In the case the Transferring Bank, Reimbursing Bank or Issuing Bank is not paying as committed, the Confirming bank has to pay ass guarantor.
⦁ Advising Bank – the bank advises (“receives”) the credit on behalf of (end) beneficiary, i.e. usually seller’s bank.
During Issuing the Credit
⦁ Accepts or rejects the DLC by replying the Transferring Bank or Issuing Bank by SWIFT MT730.
⦁ Advises (notifies) the Beneficiary.
⦁ Nominated/Negotiating Bank – the bank to accept/approve/negotiate drawing of payment from the DLC upon presentation of documents, i.e. usually seller’s bank.
During Handling of Documents
⦁ Gets the documents for payment from the Remitting Bank – if not same bank.
⦁ Examines the documents and concludes if discrepant or non-discrepant.
⦁ Advises the Confirming Bank, Transferring Bank, Issuing Bank and/or Advising Bank of the result of evaluation of the documents provided:
⦁ By MT754 if documents presented comply with the requirements of the DLC for payment.
⦁ By MT750 if documents presented are discrepant from the requirements of the DLC.
During Execution of Payment
Pays the End Beneficiary.
Remitting Bank – the bank to collect (“recieve”) the documents required to draw payment from the DLC, i.e. usually seller’s bank.
During Handling of Documents
⦁ Collects the documents from the end Benificiary.
⦁ In the case where Remitting Bank and Negotiating Bank are not the same: Sends the documents by courier to Negotiating bank.
⦁ Beneficiary – the party/parties to get paid from the DLC. If transferable DLC, the 1st beneficiary is the reseller, and the 2nd beneficiary is the seller or similar. One DLC can have several primary or secondary beneficiaries.
During Issuing the Credit
⦁ Gets advise from Advising Bank on the DLC being received.
During Handling of Documents
⦁ Presents documents to Remitting Bank.
During Execution of Payment
⦁ Gets paid by the Nominated Bank.

Note when using DLC:
A DLC at Sight is acting both as guarantee and payment as an irrevocable instrument for future payment against presentation of specified documents listing specified information/values.
A Revolving DLC requires credit line for the accumulated value of all possible drawings, i.e. full contract value.
The (Negotiating) bank does not verify or validate the authenticity of the documents or the statements therein. The examination and conclusion from the banks are solely based on the documents presented without examining the reality of the physical world. If the documents have not obviously been tampered or are fraudulent, the documents will be accepted as genuine as basis for legal payment.
Unless discrepancies are explicitly allowed, all and any deviation from conditions outlined in the DLC will permit all and any of the guarantors to refuse drawing – both in regards to documents not complying in any sense with the requirements listed, down to spelling errors (unless explicitly accepted) and to deviation in form of missing drawings from a revolving DLC or attempts to draw less than outlined within the acceptable tolerances.
⦁ A DLC is a bank to bank guarantee, not an account to account guarantee, i.e. the banks are accountable for payment and not as such the account holder.
⦁ Drafting a DLC is a job for experts. Minor errors might jeopardize the credit completely resulting in lack of payment for the service or goods supplied.

EXW – Ex-Works

The buyer pays all costs of transport from pickup at the supplier’s premises, e.g. EXW Hong Kong.


EUR1 Certificate is a certificate based upon treaties between EU and third countries giving reduced customs duties when importing to EU. To obtain a EUR1 certificate for a specific shipment the producer or shipper must be able to prove the origin of the goods by providing a valid Certificate of Origin certifying the full and true origin of the goods to be the country of which the EUR1 Certificate is issued for (cf. Certificate of Origin above).

Note that EUR1 is not by automatic the same as duty free import to EU; the level of customs duty fee reduction depends on the specific agreement between the country of origin and EU. The treaties regulation the EUR1 are named GSP – Generalized System of Preferences. You can find a list of countries with a GSP agreement with the EU here. EUR1 is not available from Brazil.

FAS – Free Alongside Ship

The supplier pays costs only to the port of loading. Loading and shipment are responsibility of the Buyer. However the supplier must clear the goods for export, e.g. FAS New York.

FOB – Free on Board

This means that the supplier pays only to the point where the goods are loaded on board the carrying vessel. The seller must clear the goods for export. As soon as the goods are over the ship’s rail they become the responsibility of the buyer, e.g. FOB Amsterdam.

FCA – Free Carrier

The supplier must deliver the goods, cleared for export, to the carrier nominated by the buyer at the named place.

FCL – Full Container Load

The goods fill a container, no other purchaser’s goods will share the container. Often suppliers will not supply less than one full container.

FCO – A Full Corporate Offer

Issued by the seller after the preliminary stages of negotiation are complete, such as a letter of intent having been issued by the buyer, and a soft probe having been conducted on their accounts by the Seller. A full corporate offer is a document which outlines the conditions of the sale.

Irrevocable Conditional Bank Pay Order (ICBPO)
Irrevocable Conditional Bank Pay Order (ICBPO) is a setup used to deposit money on an account – for a purchase or different – and to be released when specified conditions are met, i.e. typically presentation of specific documents.

An ICBPO is typically used to deposit money for a purchase by buyer in seller’s bank. An ICBPO is more safe for the seller than DLC or SBLC+TT, but more risky for the buyer, but less risky for the buyer than paying the seller upfront in advance. An ICBPO gives the seller advantages in regards to monetizating of the payment instrument, which might making it possible for the seller to offer the buyer a further discount over DLC or SBLC+TT payment.

ICPO – Irrevocable Corporate Purchase Order

This is a document drawn up by commercial Buyers. It contains the quantities and type of commodity required, and other conditions that the buyer would like the sale to proceed under. Once submitted to the Seller, this is deemed to be binding and the corporation is obliged to complete the sale.

ICUMSA– International Commission for Uniform Methods of Sugar Analysis

This is an international body that regulates and standardizes sugar testing processes. It is also used to refer to various grades of sugar, such as “ICUMSA 45” for instance.

Invoice (PI, CI)

The Invoice is issued from the seller to the buyer:
⦁ Date of Issue
⦁ Name of Seller
⦁ Name of Buyer
⦁ List of products being shippent with quantity, unit price and sub total
⦁ Invoiced total
⦁ Eventual tax or duty to be pre-paid by the seller
⦁ Freight cost – if not included in the unit price
⦁ Payment terms, incl. credit period
A Proforma Invoice (PI) is issued prior to the actually shipping of the goods for the purpose of the buyer to acquire the needed credit or payment instrument from bank or to obtain a estimate or pre-commitment from the customs for the import/export duties to be paid. The Commercial Invoice (CI) is issued when the shipment is ready to ship from the premises of the seller


International Maritime Organization is an organization under the United Nations. The IMO’s primary purpose is to develop and maintain a comprehensive regulatory framework for shipping and its remit today includes safety, environmental concerns, legal matters, technical co-operation, maritime security and the efficiency of shipping.

An IMO Number is a unique vessel identification number issued by IMO. The number starts with “IMO” followed by a number of digits.

Letter of Intent (LoI)

Letter of Intent (LoI) is issued by the buyer to specify the intension to buy a specified product of a specified quantity on specific terms. It should include a target price. A valid LoI must as minimum include:

⦁ Issuing date
⦁ Buyer identified by name, full address, company registration number and contact information
⦁ Specification of the product requested
⦁ Quantity
⦁ Destination
⦁ Shipping terms
⦁ Target price
⦁ Acceptable payment terms
⦁ Any other mandatory requirements

L/C – Letter of Credit

Letter of credit is a document issued from the Buyer’s bank to the Seller which guarantee payment to the beneficiary of the letter of credit (the Seller), as long as the terms and conditions set out in the letter of credit are met. L/C are almost always irrevocable, but can be transferable. For regular shipments a Revolving L/C is often utilized.

The various types of Letters of Credit can be defined as follows:

CL/C (Confirmed Letter of Credit)

A letter of credit, issued by a foreign bank, with validity confirmed by a First Class (usually US or European) bank. A seller with CL/C terms is assured of payment even if the foreign buyer or the foreign bank defaults.

DL/C (Documentary Letter of Credit)

A document issued by a bank which guarantees the payment of a buyer’s drafts for a specified period and up to a specified amount. The Documentary Letter of Credit provides a more secure means of carrying out transactions in import-export trade than by documentary bills collection (see Bill of Exchange). A letter of credit when transmitted through a bank, usually in the seller’s country, becomes the means by which the seller obtains payment. The necessary documents, correctly completed, are presented to a bank by an agreed date. If the terms of the credit are met, a seller can receive payment from a bank immediately.

⦁ Loading Certificate – Inspection Report
⦁ A Loading Certificate or Inspection Report is issued by SGS or similar and typically includes:
⦁ A thorough check of the overal appearance of the cargo and any packaging.
⦁ Verification that all sugar is being loaded by checking the number and size of each part of the shipment against the contract.
⦁ Ensuring that proper handling procedures are followed during loading.
⦁ Ensuring that the transport medium is clean and sanitary.
⦁ Ensuring that the shipment is adequately stowed and secured, and that it is protected from the elements.
The Loading Certificate provides the buyer with peace of mind that not only was the sugar in good condition when it left the mill or warehouse, but that it was handled properly prior to shipping. It is also important from the seller’s perspective that a Loading Certificate be obtained as it is additional proof in case of mishap in transit that all due care was taken to ensure successful delivery to the buyer.

IL/C (Irrevocable Letter of Credit)

An Irrevocable Letter of Credit cannot be amended or cancelled without the consent of the issuing bank, the confirming bank (if confirmed), bears the further payment undertaking of another bank, usually the advising bank, called the Confirming Bank here since it adds its confirmation to the letter of credit. This may also be used if the issuing bank is of unknown doubtful standing to the seller and the beneficiary. The payment is guaranteed by the bank if the credit terms and conditions are fully met by the beneficiary. The words Irrevocable Documentary Credit or Irrevocable Credit may be indicated in the L/C. It means that once the buyer’s conditions in the letter have been agreed to by the seller, they constitute a definite undertaking by the buyer’s bank and cannot be revoked without the seller’s agreement.

Revocable Letters of Credit are rarely used as the terms of the credit can be cancelled or amended by an overseas buyer at any time without notice to the seller.

RL/C (Revolving Letter of Credit)

When a letter of credit (L/C) is specifically designated a Revolving Letter of Credit, the amount involved when utilized is automatically reinstated, that is, the amount becomes available again without issuing another L/C and usually under the same terms and conditions within a period of time (usually several months to one year). This saves administration when multiple shipments are involved.

SBL/C (Stand-by Letter of Credit)

The term Standby Letter of Credit (SBL/C) was invented by U.S. banks because under the Glass-Steagal Act banks in the U.S. were not allowed to issue Bank(er’s) Guarantees so they got round the law by formatting their BGs like Letters of Credit and called them Standby L/Cs. The word “standby” means the same as “contingent” – available when called upon. Thus, this is a financial guarantee or performance bond issued by a bank on behalf of a buyer. i.e. a written obligation of the issuing bank to pay a sum to a beneficiary on behalf of their customer in the event that the customer himself does not pay the beneficiary. The SBL/C is regulated by the ICC-500 rules.

TL/C- Transferable letter of credit

This is the favorite instrument of the traders and middlemen to offer secure terms of payments to third parties such as their suppliers (second beneficiary in the letter of credit). When the buyer pays the letter of credit, part of the proceeds is transferred to the second Beneficiary.

LOI – Letter of Intent

Letter of Intent is a document issued from the Buyer to the Seller which indicates that the Buyer would like to enter into negotiations with the Seller in the hope of purchasing commodity. The letter of intent is not legally binding, but it does provide a starting point for negotiations.

MOQ – Minimum Order Quantity

This is often expressed by sellers who have a minimum amount of sugar that they are prepared to sell in any one shipment. Smaller quantities do not represent sufficient profit margins to be worth the effort that the seller must go to in preparing sugar for shipment.

Non GMO Certificate

A Non GMO Certificate certifies that the sugar originates from Cane Crops not generically manipulated or changed.

PB – Performance Bond

This is a type of bank guarantee which is issued from the Seller to the Buyer. It guarantees that the Seller will meet the terms of the contract. Normally issued in the amount of 2 % of the total amount of the contract, a performance bond can be drawn upon by the Buyer in the event that the Seller breaks the contract and fails to provide the product which was stipulated in the contract.

Packing List

A packing list is simply a document which outlines the quantity and type of product shipped. This document is normally very detailed. In order for the seller to obtain payment it is important that the packing list is identical to the terms of the contract and those set out in the letter of credit.

PoP – Proof of Product

A Proof of Product (PoP) is often requested by customers or agents who believe it will give them some guarantee of the existence of the product and ability of the supplier to deliver the product. In practice many PoPs are false. PoP offers no proof at all, because once a PoP has been drafted it is automatically out of date – the product could have been sold to another buyer and therefore no longer exists. Nevertheless, a PoP is still occasionally requested as apparent proof that a seller has the product. A PoP is realistically provided only when the Buyer’s bank issues a Bank Confirmation Letter (BCL) to the Seller and or seller’s bank via SWIFT MT799. Then the Seller’s bank can check the availability of funds in the Buyer’s bank and issue a PoP to the Buyer’s bank within an agreed time period (e.g. 5 days). The seller can also choose to issue PoP to buyer against a non-operative or pre-advice bank guarantee or letter of credit opened. *Please review our procedures.

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Top 50 world bank. These are trusted banks which are preferred (or in most cases even mandatory) in commodity trading.


A Proforma Invoice (Proforma) is an official price quote a step up from a published price list that allows the customer to present the Proforma Invoice to their Accounting Department and to arrange a prepayment. Customers pre-paying orders via bank money transfer before shipping an order most commonly request it. It is used by customers to formalize the terms of sale (price, shipping, CIF, location, shipping date, etc.) and properly allocate and/or transfer the funds needed for the purchase. The Proforma guarantees a price and terms for an established period of time while the customer acquires and/or transfers the funds.


A pre-advise is a SWIFT message giving pre-advise of DLC by MT705 or pre-advise of SBLC by MT766. The pre-advise is basically a notification and a commitment.

The notification aspect is telling the Advising Bank or Transferring Bank that the Issuing Bank is ready, able and willing to issue the included MT700/701/710/711 or MT760 verbiage of a DLC respectfully SBLC.

The commitment part is a number of conditions from the Advising Bank to be met to make the Issuing Bank actually issue the specified DLC or SBLC. Those conditions may vary from anything from asking the Advising Bank to confirm that the Beneficiary is ready, able and willing to supply the service or the goods to being paid for by MT199 or MT799 – to asking the Advising Bank to issue Proof of Product by MT799 and issue Performance Bond by MT760.

A typical scheme using Pre-advice is like this:
⦁ Buyer’s bank issues pre-advise DLC by SWIFT MT705 or pre-advise SBLC by SWIFT MT766 to seller’s bank asking for PoP and PB2% for issuing DLC or SBLC and the verbiage for the DLC or SBLC.
⦁ Seller’s bank responds by sending Proof of Product (PoP) by SWIFT MT799 and Performance Bond 2% (PB2%) by SWIFT MT760.
⦁ Buyer’s bank issues DLC by SWIFT MT700 or SBLC by SWIFT MT760.
⦁ Seller ships the goods.

RWA – Ready, Willing and Able

This is a document which is issued by the Buyer’s bank. The bank confirms that their client has the sufficient funds in their possession and is ready, willing and able to engage in the contract.

SGS – Société Générale de Surveillance

SGS is the world’s leading inspection, verification, testing and certification company. SGS is recognized as the global benchmark for quality and integrity. The core services offered by SGS can be divided into three categories:

* Inspection Services. SGS inspects and verifies the quantity, weight and quality of traded goods. Inspection typically takes place at the manufacturer/supplier’s premises or at time of loading or at destination during discharge/off-loading.

* Testing Services. SGS tests product quality and performance against various health, safety and regulatory standards. SGS operates state of the art laboratories on or close to customers’ premises.

* Certification Services. SGS certifies that products, systems or services meet the requirements of standards set by governments (e.g. GOST R), standardization bodies (e.g.ISO 9000) or by SGS customers. SGS also develops and certifies its own standards.

Before products leaves the port of sale, an inspection is carried out by SGS. SGS inspections provide peace of mind for the buyer who can be assured that the meat is of a high quality if it is cleared by SGS inspectors.

SIF – Serviço de Inspeção Federal

Globally known and frequently used in the poultry and meat plant approval system S.I.F. is the Federal Inspection Service provided by the Brazilian Department of Inspection of Animal Products – DIPOA and is responsible for ensuring the quality of products of animal origin for the domestic and international markets, as well as for imported products. 

Stowage Plan

A Stowage Plan is a document issued by the shipping company outlining the disposition of how the vessel is loaded, i.e. where which (part of the) shipment is location on the vessel, for instance where a specific container is location on the vessel.
Shipping Company Statement
A shipping company statement relates to the ship aboard which the product will travel. It normally states that the ship is of a certain age, and that it is well maintained. This document is designed to provide assurance that the vessel is sea worthy.

Standby Letter of Credit (SBLC) or Bank Guarantee (BG)

A Standby Letter of Credit (SBLC) or Bank Guarantee (BG) is usually the SWIFT message MT760, which is a free text message format. SBLC using MT700/701 or MT710/711 (third party bank) is also possible. Most of the technicalities in issuing and executing a SBLC/BG are the same as for Documentary Letter of Credit (see below). In the USA banks are not allowed to work with bank guarantees (BG).

The major difference between Documentary Letter of Credit and Standby Letter of Credits or Bank Gaurantee is that SBLC and BG are no payment instrument, but a “default” guarantee only to be executed in the event that the payment is not being executed as agreed upon. The typically way to do the actual payment is by T/T (MT103). That is the reason why a SBLC or BG will almost never be revolving; instead the SBLC or BG is open for the full contract term and the contract will simply be terminated if the SBLC or BG is being drawn (to the full extend of the value of the guarantee).

SBLC and BG have the advantage over DLC that the value is usually only for one (months) shipment and therefore requires much less credit line than a revolving DLC, which requires credit line for the full contract value. But of course this also makes the SBLC or BG a weaker guarantee for continued executing of the contract in favor of the seller/supplier.

Same a DLC might be transferable a SBLC or BG might be transferable. However, as being a guarantee and not a conditional payment instrument the banks are much more unlikely to accept the status of being transferred as the same as the transferring bank cannot be held countable for the guarantee.

Soft Corporate Offer (SCO) & Full Corporate Offer (FCO)
A Soft Corporate Offer (SCO) is a non-binding offer issued by the seller or someone representing the seller specifying the product, quantity, price, shipping terms and payment terms.

A Full Corporate Offer (FCO) is binding offer only to be issued by the seller or an authorized representative of the seller specifying the offer in full details.

A valid SCO or FCO must as minimum include:
⦁ Issuing date
⦁ Validity in time
⦁ Specification of the product
⦁ Minimum Order Quantity
⦁ Origin
⦁ Shipping terms
⦁ Price
⦁ Payment terms
⦁ Any other mandatory terms
A FCO must furthermore include:
⦁ Seller identified by name, full address, company registration number and contact information


⦁ This is an authorization from the buyer to the seller to contact the buyer’s bank to verify the buyer has the financial capability to purchase the quantity of products and the method of payment agreed by Buyer identified by name, full address, company registration number and contact information in the (LOI) Letter of Intent.

SWIFT – Society for Worldwide Interbank Financial Telecommunication

Provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment. A global service which is responsible for facilitating communication between banks. Most payments are made via SWIFT; however, SWIFT does not facilitate funds transfer; rather, it sends payment orders, which must be settled by correspondent accounts that the institutions have with each other.

T2L – Community Status

T2L Certificate is a certificate certifying free circulation within the EU member states. It implies that import duties have been fully paid and import permission to EU been granted.

Obtaining import permit to the European Union is a quite complex process based on three sets of requirements:
⦁ HACCP – Hazard Analysis and Critical Control Points, which is a system focusing on analysis to risk factors and self-control, which must be fully documented all the way back to the production and approved by food and/or health authorities of the country of import
⦁ EU legislation on limit values to parameters of the chemical composition; the EU limit values apply to all member states
⦁ Additional requirements outlined in national legislation of each member state. In some cases it will be easier to acquire an import permit in one EU member state compared to others, and then acquire a T2L certificate for free circulation.

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