Soft commodities market at a first glance.

Problems and challenges of the huge market.

Today soft commodities market is a complicated multilayer pie.

“Soft commodities, or softs, are commodities such as coffee, cocoa, sugar, corn, wheat, soybean, fruit and livestock. The term generally refers to commodities that are grown, rather than mined; the latter (such as oil, copper and gold) are known as hard commodities.” — Wikipedia.

Soft commodities represent some of the oldest types of futures know to have been actively traded. Some of the oldest commodities still around today. You can trace their roots in commerce back over thousands of years. It is important to note that trading in this market involves substantial risks and is not suitable for everyone, and only risk capital should be used.

General overview of soft commodities market and its problems.

Global soft commodity market is a market with 800 million tons of exported commodities that equivalent of more than 300 billion US dollars with more than 1.25 trillion payment turnover. (According to the EU Committee of Agriculture and Rural Development and the USDA WASDE report dated May 10, 2018)

The international market of soft commodities is a complex global multi-level system covering both key players − market makers and providers of various logistics, insurance and financial services, which form the whole ecosystem of the market. Before commodity agri-products reach the producer in the country of destination, they go through a supply chain consisting of a number of basic elements:

• KYC Compliance
• Production
• Trading
• Contracts Execution
• Logistics
• International Payments
• Trade finance

At each of these stages and within each element, there are a number of bottlenecks that significantly reduce the effectiveness of the functioning of the market, and depriving the share of the benefits of both market makers and market-users:

• Complicated and expensive KYC Compliance. Right now all companies have to go through detailed KYC compliance held by counterparties and financial institutions like banks. Currently this leads to time loss, high costs and risk of confidential data disclosure.
• Non traceable production. Lack of reliable confirmation of origin leading to additional costs and time spends for certification and food safety compliance.
• Framentated trading market. Absence of a single marketplace leads to problematic analysis of information resulting in market volatility due to complicated decision making. Large number of middlemen significantly extends the supply chain.
• Complicated contracts execution. Absence of unified and automated communications system leads to numerous mistakes due to human factor, low speed and additional costs. All together increasing the price for end user.
• Non transparent and non automated logistics. Large amount of middlemen and brokers increase price of logistics. Low transparency of cargo delivery process leads to loss of end customer`s trust.
• Slow and expensive international payments. Current technology does not provide desired speed and transparency of international payments creating one of the most noticeable hurdles for the global business.
• Lack and low accessibility of trade financing. Complicated access to and of private capital ot the global agri market and especially for emergent markets, medium size companies and SMEs.

Problems described above set the following challenges:

- Industry requires the global technology and method changes.

- Need for adjustment to the changing philosophy of international payments

- Set of solid quality standards of business management

- Break the high cultural barriers for international relations

- Facilitate access to trade financing in the main exporter countries

- Increase speed of business processes

We firmly believe that most of these problems can be solved and challenges over come by using modern digital technologies based on blockchain solutions introduced on the Tradomatic platform.

We invite you to follow us:

Follow us on:
Twitter — https://twitter.com/Tradomatic_io
Facebook — https://www.facebook.com/TradomaticICO/
Instagram — https://www.instagram.com/tradomatic/
YouTube — https://youtube.com/channel/UCc1jCsDnfQHGseby5SGtJcw
LinkedIn — https://www.linkedin.com/company/tradomatic/
Medium — https://medium.com/@tradomatic