A/W : All Water
ANER : Asia North America Eastbound Rate
AWB : Air Waybill
B/L : Bill of Lading
B/R : Buying Rate
BAF : Bunker Adjustment Factor
C&F : Cost and Freight
CBM : Cubic Meter
C.C : Collect
C.S.C : Container Service Charge
C.Y. : Container Yard
C/(CNEE) : Consignee
C/O : Certificate of Origin
CAF : Currency Adjustment Factor
CFS : Container Freight Station
CHB : Customs House Broker
CIF : Cost, Insurance and Freight
CIP : Carriage and Insurance Paid To
COMM : Commodity
CPT : Carriage Paid To
CTNR : Container
D/A : Document Against Acceptance
D/O : Delivery Order
D/P : Document Against Payment
DAF : Delivered At Frontier
DDC : Destination Delivery Charge
DDP : Delivered Duty Paid
DDU : Delivered Duty Unpaid
DEQ : Delivered Ex Quay
DES : Delivered Ex Ship
Doc# : Document Number
EPS : Equipment Position Surcharges
Ex : Work/ExFactory
F/F : Freight Forwarder
FAF : Fuel Adjustment Factor
FAK : Freight All Kind
FAS : Free Alongside Ship
FCA : Free Carrier
FCL : Full Container Load
FEU 40‘ : Forty-Foot Equivalent Unit 40’
FMC : Federal Maritime Commission
FOB : Free On Board
GRI : General RateIncrease
H/C : Handling Charge
HBL : House B/L
I/S : Inside Sales
IA : Independent Action
L/C : Letter of Credit 　
LCL : Less Than Container Load
M/T 尺 : Measurement Ton
MB/L : Master Bill Of Loading
MLB : Minni Land Bridge
MTD : Multimodal Transport Document
N/F : Notify
NVOCC : Non Vessel Operating Common Carrier
O/F : Ocean Freight
OBL : Ocean (or original )B/L
OCP : Overland Continental Point
OP : Operation
ORC : Origen Recevie Charges (Guangdong, China)
P.P : Prepaid
PCS : Port Congestion Surcharge
POD : Port Of Destination
POL : Port Of Loading
PSS : Peak Season Sucharges
S/(Shpr) : Shipper
S/C : Sales Contract
S/O : Shipping Order
S/R : Selling Rate
SC : Service Contract
SSL : Steam Ship Line
T.O.C : Terminal Operations Option
T.R.C : Terminal Receiving Charge
T/S : Trans-Ship
T/T : Transit Time
TEU 20‘ : Twenty-Foot Equivalent Unit 20’
THC : Terminal Handling Charges (Hongkong)
TTL : Total
TVC/ TVR : Time Volume Contract/ Rate
VOCC : Vessel Operating Common Carrier
W/M : Weight or Measurement ton
W/T : Weight Ton
YAS : Yard Surcharges

Terminology

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By Andrej Lavrenc - Independent commodity sourcing agent, and CEO of Raw Polymers Ltd.

Win The War Against Fraud

Buyers, sellers and brokers all share a common enemy: the scammer. With each passing year, scammers seem to become more ubiquitous, preying on the strong and the weak alike, and making off with billions of dollars of honest people’s money. This boom in fraudulent activity has occurred in direct proportion to the growth of the Internet. It is no secret that advances in communication technology have opened up the world for trading, and where the title of ‘broker’ was once highly esteemed and difficult to attain, now anyone with an Internet connection can call themselves a broker and start trading.

Hiding behind the anonymity of the Internet, registering sites for mere dollars at a time and creating convincing fronts for businesses which never existed, these scammers mean that the term ‘world wide web’ has never been more accurate. Like a literal web, unwary traders become tangled in seductive threads of lies and are bled dry by the more skillful predators.

As a modern broker, your success depends in large part on building a rock solid reputation for reliability and results. Repeat business is often the best business a broker can get, and it comes as a result of performing well for your clients who are paying you not just to find the right goods at the right price, but to protect their funds from scammers. When a broker is scammed, its not just the money risked on the trade that is lost, it is also a substantial amount of future earnings disappearing as clients lose faith and move on to more reliable brokers.

The good news is that even in today’s world of virtual trading, there are ways to keep things real. This booklet/site will teach brokers, sellers and buyers how to avoid scams and seal real deals which will ensure success and profitability for many years to come.

Who’s Who Of Fraud

The first step in avoiding fraud understanding it, which means also understanding who the players are. This section explores both sides of the fraud coin, offering insight into those that scam, and those who are scammed.

Who Are Fraud Victims?

Fraud victims are often portrayed as naive dull witted individuals who all but throw their money at any opportunity which comes along. This is a stereotype which scammers welcome, as nobody considers themselves a fool, which means that most people consider themselves immune to fraud from the outset. An arrogant trader who thinks he or she knows it all is one who is likely to be stung by experienced scammers who foster the arrogance, using it as a tool to keep the unwitting victim on the hook and in the dark.

It is very dangerous to look down on victims of fraud for a two reasons. The first reason is that the scammed victim could well be you one day if you are not careful, and two, whilst you are gloating and feeling superior, you are not learning from the other person’s mistakes, and are in fact, setting yourself up to fall into the same trap.

The reality is that every trader is a potential fraud victim, and it is the rare (and perhaps non existent trader) who has never been the victim of some fraud, be it minor or major. The old adage ‘pride comes before a fall’ is never more true than when it is applied to international trading.

Who Are The Fraudsters?

Being able to identify a fraudster is an invaluable skill, and one that will grow with time and experience. However even experienced traders can sometimes be taken in by a smooth talker with a slick pitch. An entire section has been devoted to the tricks of fraudsters, so that will not be dwelled upon too much here. Suffice to say, most scammers appear to be very personable people. It is their job to falsely gain the trust of unwitting victims, and many of them are very good at it indeed.

Scammers by Geography

Nigerian scammers have become well known even to non traders, and though I must caution that nationality is not evidence of fraud in itself, it is wise to thoroughly investigate trade leads and offers which emerge from Nigeria and other African nations. As China further develops into an economic superpower, similar scammers are emerging, as are many in Eastern European countries. There are certain commonalities in all these cases, the scammers come from countries which have seen severe economic repression, where making an ‘honest’ dollar is a far greater challenge than in other, more developed countries.

Organized Crime

Organized crime is quite commonly behind many scammers, which is a powerful reason to stay well clear of deals where you cannot identify all parties and sources. The consequences of becoming entangled which such groups and leaving oneself financially, or even physically vulnerable can be extreme. Traders should be aware that in some jurisdictions, organized crime may be integrated into the official bureaucracy and government offices, so additional care should be taken when dealing with business partners in unfamiliar jurisdictions. A trader should always research the unique climate of a new jurisdiction with regards to organized crime, amongst other things. Information on how to do this is provided in later sections of this guide.

Lone Wolves

Perhaps the most dangerous of all scammers, lone wolves are scammers who work alone or in small groups, disappearing completely once the fraud has been carried out successfully, then reappearing under a completely different guise weeks or months later. These scammers are exceptionally hard to catch because they are so independent with few ties, and also because they are often very good at what they do.

In general, scammers and fraudsters have no qualms about defrauding honest traders out of large sums of money. Many show sociopathic tendencies, knowing that what they are doing is wrong, but feeling no sense of guilt or remorse about it. To them, fraud is but a game, and like any game those better at it deserve to win. This can be disheartening for honest traders, but it is a reality in of the world of international business.

Tricks Of A Fraudster

Though fraud is ostensibly a commercial game, underlying all types of fraud are psychological games and tricks that lure the ‘mark’ into giving up their hard earned cash. Many brokers and traders think they are above such games, perhaps because they often use well known selling techniques in order to close deals themselves. A successful broker isn’t necessarily one who has the best trade leads, or even the best prices, it’s one who understands people and knows how to make them feel both excited about the deal that is being presented to then, and confident about committing large sums of their own money.

Scammers and fraudsters use the same techniques and tricks that honest salesmen, marketers, and yes, traders do in their day to day business. The only difference is that the scammer is far from honest. Fraudsters can make millions of dollars a year separating not fools, but overeager, greedy, and lazy people from their money.

Good fraudsters are charming, well mannered, personable people. It is not uncommon for victims of fraud to feel emotionally bereft after being scammed, because fraudsters inveigle their way the affections of the ones they are scamming and become a friend, perhaps even a confidant. The betrayal isn’t only fiscal, it is also personal.

Here are a few questions to ask yourself when dealing with a potential contact:

Do they often turn the conversation to personal matters?

Wanting to talk about you is not just the sign of a friendly person, it may also be the sign of someone trying to ‘profile’ you. The more a scammer knows about you, the easier it is for them to trick you. Scams are all about finding weak points and exploiting them. A single man’s weak points, or ‘buttons’ are quite different from those of a family man, or a married woman, and the scammer knows this and will often try to find out as much personal information about you as possible in order to create a tailored approach.

If you end up discussing how your children are getting along at preschool during the first phone conversation with a potential trading partner, be aware that you may be giving away vital information.. Though there are naturally friendly, chatty people out there, most brokers don’t have the time to talk about other people’s personal lives during work hours, and certainly not at the outset of a business relationship.

Remember, a scammer is trying to get to know you in order to form a rapport with you. They’ll be trying to identify your underlying belief systems, and discovering what makes you tick. Are you trying to support a growing family? Are you in the trading business for a quick buck? Are you an adrenaline junkie? Information that may seem innocent and irrelevant to you can provide a scammer with vital information.

By all means it is good business to develop a friendly relationship with one’s trading partners, but these sorts of relationships develop naturally over time, not in the first contact. Keep things professional, and not only will you be more efficient in your work, you will also be side stepping the potential scammer’s trap.

How do you feel when talking to this person?

Most people, and traders especially, are fairly good at judging people. In many senses, a broker lives and dies by his or her wits. Those who have been scammed often claim that they were suspicious at the outset, but allowed themselves to be lulled into a false sense of security. Don’t make that mistake. If you are suspicious at the outset, maintain your guard and make sure all procedures are followed to the letter, and your ‘homework’ is well done in terms of verifying contacts, goods, the vessel the goods are to be shipped on, every element of the deal. No matter how friendly you may feel towards a trading partner, it is always a mistake to take them at face value and omit to do the leg work which is required in every transaction.

Scammers often get away with fraudulent deals because the trader comes to trust them to the point where they don’t bother to do the essential groundwork which should be done when it comes to any deal. If you find yourself cutting corners, or neglecting to research the details of the trade, be warned that you could be the victim of a scam in very short order.

Are you excited and anxious when it comes to this trader and their proposed deal?

One of the oldest sakes tricks in the book is creating a false sense of urgency. The victim of a scam is whipped up into a frenzy by the scammer’s talk of limited time offers, high demand commodities, special invitations, and other such verbal traps which make the victim believe that not only is this the best deal they will ever get, they must take it now, now, now!

As a trader, you already know the value of being cool and calculating when it comes to business. Hundreds of thousands, even millions of dollars are often at stake, which is far too much money on the line for the trader to be making decisions based on emotion. If a potential partner tries these cheap tricks on you, it may be time to walk away, even if the deal is not a scam, this is not the way reputable traders do business. The global market is not a second hand car yard, and you don’t want to be dealing with people who use that sort of approach.

Does the deal have you slavering at the mouth?

Perhaps the main tool in the scammer’s arsenal is the victim’s own sense of greed. Every year, thousands of people loose millions of dollars chasing after ‘dream deals’. Scammers offer products at less than half their market value, explaining away the suspicions of the trader by claiming that the goods available because of seasonal excess, or because the original buyer fell through. No matter what a ‘trader’ tells you, remember that it is called a market value for a reason – that’s what a commodity is worth on the open market. Nobody in their right mind would sell anything for substantially less than the current going rate, and this is especially true in the world of international commodity trading. A private seller may discount a car or house because they need a quick sale, a reputable broker with access to the open market does not need to discount their product by large percentages, ever.

Advising against purchasing goods which are being sold for a fraction of their value seems so obvious as to be entirely redundant, but a large number of traders are suckered into scams this way because their greed takes over, and they trust the scammer because unlike them, he has done his homework and knows exactly what buttons to press, and they put their money, or perhaps worse, their client’s money on the line, and lose the lot. This can be a career ending mistake. Don’t make it.

Tools Of The Fraudster

In addition to the elements listed in the ‘Tricks of the Fraudster’ section, here are some additional tools that scammers often use.

Useless Documentation

It is surprising how much nonsense documentation is out there in the world of trading. Oftentimes these useless documents are the result of the desire of fraudulent or simply desperate traders to ’seal the deal’. The buyer thinks they are bound by documentation that actually has no legal standing or use whatsoever. Sometimes useless documentation arises when traders with experience in one commodity try to trade a new commodity without learning the protocols associated with that particular commodity. Be aware that every industry has their own standards, and every country has different rules which govern trading in their jurisdiction. Buyers, sellers, and brokers all need to educate themselves on the proper legal procedures for their industry and location.

Offshore Havens

Offshore havens are paradises for scammers, but also legitimate locations of business for those who wish to protect their assets. Offshore havens attract scammers due to the privacy they guarantee, and also through legal protections which are extended to offshore businesses operating in the haven. In many such jurisdictions, bank accounts are not able to be viewed or touched by third parties, even when the owner is being prosecuted for fraud.

The Broker as a Tool of Fraud

As a broker, one runs the risk of being put in the unenviable position of being simply used to commit fraud. Scam ’suppliers’ make offers which brokers then take to their clients without doing the necessary leg work to verify them. The upshot is an upset, defrauded client, and a broker facing legal action. Whilst it may be unfair to prosecute based on fraudulent intent, certainly brokers who allow their clients to be scammed are guilty of negligence.

Though the Internet is the source of many legitimate trade leads, it is also the source of dead ends and scams. Sometimes offers are posted on boards years after they have expired, in other cases, legitimate leads are tweaked to suit scam artists. All too often, eager traders pick up on these leads and present them to their clients as potential deals. The client, trusting the trader, makes a financial commitment, and subsequently loses their investment in very short order.

As a trader, it is your responsibility to be certain of the legitimacy of an offer before you present it to your client. Though verifying trade leads can sometimes be arduous, and the temptation to get the offer on the table before someone else does can be great, it is exactly these feelings that have allowed scammers to flourish in the new trading world.

The barriers to becoming a trader have fallen with the proliferation of the Internet and related technologies, and people who at one time would have been unable to conduct a career as a trader are suddenly able to wheel and deal with the best of them. The pond has become a great ocean teaming with small fry which predatory scammers feed upon and grow rich and fat whilst clients become disillusioned and promising trading careers are ruined.

The Number One Form Of Fraud

The major form of fraud taking place in international trading today is documentation fraud. It is quite common in many industries that the goods are never sighted by trader or buyer until after the transaction is complete, monies paid, and goods shipped. Though this may seem odd to the uninitiated, it is a successful method of conducting trading because the seller does not receive payment until after the goods are shipped. In an ideal world, this means that the seller must prepare the goods for shipment, have them inspected by independent inspectors, and then ship them before they collect payment, which they do so presenting the documentation from the inspections and shipping company. The financial instrument which allows this to occur is called a letter of credit.

A letter of credit is a document issued by the buyer’s bank which assigns the value of the letter to the beneficiary (the seller) upon presentation of documentation which confirms that the goods have been shipped to the buyer. However, if documentation is falsified by the so called seller, and the bank makes payment on the letter of credit, then the buyer can easily be out both the cash and the goods through no fault of their own. The reason for this is explained more thoroughly in the next section, ‘Letter of Credit Fraud’.

Remember that banks deal in documents, not goods. This means that a scammer who appears to have the right documentation can often make off with the proceeds of a Bank Guarantee or Letter of Credit before the poor victim even knows what happened.

Letter of Credit Fraud

Letters of credit provide great capacity for fraud because they are used in transactions where goods are not sighted directly by the buyer, and are often paid for after shipment, not upon receipt, thus trading globally provides great capacity for profit, but also great capacity for deception.

Letters of credit have proved to be one of the safer financial instruments, and have a long history indeed, however they are vulnerable to fraud due to the fact that they are entirely dependent on documentation. If documentation presented along with a letter of credit appears valid, then a bank will pay the amount stipulated on the letter of credit. If the transaction is later revealed to be fraudulent, the bank takes no responsibility for the buyer’s loss. In fact clauses in the Letter of Credit itself specifically absolve the bank of any responsibility for paying out

These clauses are outlined in the UCP 600, a document issued by the ICC (International Chamber of Commerce) which covers the Uniform Customs and Practice for letters of credit. This document is made up of several Articles which comprise the guidelines under which letters of credit are issued, used, verified and otherwise handled. Article 34 is a specific disclaimer which absolves banks of any responsibility in the event of document fraud.

UCP 600 Article 34: Disclaimer on Effectiveness of Documents

A bank assumes no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any document, or for the general or particular conditions stipulated in a document or superimposed thereon; nor does it assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods, services or other performance represented by any document, or for the good faith or acts or omissions, solvency, performance or standing of the consignor, the carrier, the forwarder, the consignee or the insurer of the goods or any other person.

Buyers should therefore be wary when it comes to issuing letters of credit, being aware that whilst there is a certain level of protection inbuilt into the letter of credit, an unscrupulous scam artist with well forged documentation can quite easily claim the full value of the letter of credit, leaving the buyer with no goods, and no legal recourse.

In many cases those perpetrating fraud into the millions are never caught. The money is sent to offshore sheltered accounts, and the scam sellers disappear underground. For this reason it is imperative that traders seeking to deal with sellers verify the authenticity and background of the seller. Scammers normally do not spend years building solid reputations simply to destroy them with one dirty deal, which means that a buyer can protect him or herself simply by researching a seller’s background, or a broker’s background if one is going through a trade intermediary. If there is little to no background, steer clear, at best this means that the trader or seller is inexperienced, at worst, they are a scammer.

A clear sign that a proposed transaction may be fraudulent is when a commodity is offered far below market value. Whilst it might be tempting to try and pick up a cheap deal often advertised as stock which has gone unsold after another buyer pulled out, or which was found to be surplus after a bumper crop, one must keep one’s head. Scammers often trap buyers by their greed, enticing them into deals that are quite simply too good to be true, and making off with their money whilst the buyer gets nothing.

This makes for a rather intimidating trading climate for some buyers. Realizing that they have little to no protection in the event of fraud, one might wonder how it is that more fraudulent activities are not reported. Indeed, the playing field seems skewed towards fraudsters, and banks, whilst happy to keep one’s money, are disinclined to safeguard funds when a letter of credit is presented.

However, doing a little research is an excellent way to protect oneself. Fraudulent documentation can be detected by doing a little research. Does the carrier exist? Can the reports be independently verified? Accepting things at face value without checking the veracity of claims is a surefire way to eventually become the victim of a scam, which brings us to our next section, preventing fraud.

Financial Instruments And Financial Instrument Fraud

The most secure form of financial instrument is a Letter of Credit, though even these are not entirely scam proof. A letter of credit allows a buyer to make a financial commitment to a deal and not expose themselves to financial loss without the seller first dispatching the goods. Letters of credit have been used for centuries, and are in many ways the backbone of international trade.

Bank Guarantees

Bank guarantees are riskier than letters of credit as they do not require documentation in order to be honored. A bank guarantee is simply a document which guarantees the beneficiary payment of a certain sum in the event of their client defaulting on a transaction. Banks are happy to issue bank guarantees as long as their client has sufficient funds in place, and once issued to a beneficiary, a bank guarantee can sometimes be used to fraudulently obtain funds.

Bank guarantee fraud also takes place in the reverse instance. In some cases, scammers issue fake bank guarantees as performance bonds, financial guarantees against loss on the part of the buyer. A fake bank guarantee is a serious matter indeed, and in many cases it is the innocent bearer of the bank guarantee who is prosecuted when it is found to be fake, not the scammer, who is long gone.

There are also instances in which bank guarantees are sometimes ’sold’ at a discount. This is a scam intended to trap the unwary trader who may not have the funds in place to arrange for their own bank to issue a bank guarantee. Along comes a brilliant offer, a bank guarantee selling for less than its stated value. This is a scam. Bank guarantees are not documents which can be sold or leased, they are issued from a bank on behalf of its client. The bank guarantee itself cannot be transferred to another party, though the proceeds may be assigned to another party. Simply put, the beneficiary of a bank guarantee can request that the proceeds of the bank guarantee be paid to another party, but they cannot assign the bank guarantee to another party who then draws on it.

For this reason, leased bank guarantees are also a scam. In both cases the unwary trader pays a substantial sum of money which represents a fraction of the alleged worth of the bank guarantee. The scam artist then makes off with the funds and the trader is left with nothing.

Long story short: Bank guarantees are not tradable items. Do not attempt to buy or lease a bank guarantee, you will be scammed.

When accepting a bank guarantee, one should exercise great care and caution. The first order of business must be to ensure that the bank guarantee is issued by one of the top 25 world banks. Small operations in tax havens often operate small banks, which are near impossible to hold to account if things go wrong. This also applies to small national banks, which, depending on their location, may be restricted in their ability to trade on a global scale. This is particularly an issue for USA based traders, as the patriot act forbids major US banks from dealing with many smaller offshore banking institutions. A bank guarantee issued from an unknown bank may be effectively worthless even if it is real.

Signs of Investment Fraud

Investment fraud is one of the most common forms of fraud because it is a nebulous area to begin with. Successful investing requires a shrewd understanding of markets, a knowledge and understanding of the field in which you are investing, the financial climate surrounding the industry, and other relevant factors pertaining to a particular investment. It is quite common for fraudsters to attempt to solicit investments from the unwary, claiming incredible returns in very short time frames.

The three main signs of fraudulent investment are:

Impossibly high returns.

If an investment is presented as an opportunity to triple your money inside a year or similar such glib claims, it is likely to be fraudulent. Fraudsters always appeal to the mark’s sense of greed, and will do their best to impress upon them how lucky they are to be offered such a special opportunity.

No risk.

Fraudsters will almost always claim that an investment is a ’sure thing’ with very low risk. In reality, the higher the possible returns, the higher the risk. High returns with low risk is a pipe dream.

Limited Time Offer.

Because the fraudster wants your money, and wants it now, they will not want you to go away and research the offer, nor will they want you to think about it. If this ‘excellent investment opportunity’ requires you to invest in short order (quite often then and there), then the savvy investor walks away.

What the fraudster is trying to do is first appeal to your greed, then reassure you that it is perfectly safe, then when you are hyped up and excited about the deal, get you to commit right away. The fraudster takes your money and is gone before you even realize that you’ve been had.

Keys To Fraud Prevention

You might be forgiven for feeling a little dismal about the world of international trading. Opportunities are rife for scammers, and legal recourse for those who are scammed is scarce. Too often scammers are never caught, or if they are, they simply serve their time and go on their merry way, living on the profits of their fraudulent transactions which are often sheltered in so called ‘tax havens’, which provide sanctuary not only from taxation, but also from legal proceedings. In many jurisdictions an entity can open a bank account or a trust which can then not be touched, even if the money is proven stolen in another jurisdiction. Because the cure is sometimes impossible to obtain, prevention is the key to avoiding fraud. Fortunately, legitimate brokers and traders have a wide range of weapons in their arsenal which can be used in the fight against fraud, they just have to make sure that they actually use them.

Know Your Market

In all things, knowledge is power. This is especially true when it comes to commodity trading. A successful trader needs to know much more than how to obtain an letter of credit and contact sellers and buyers, he or she needs to know the industry they are working with inside and out. If you are trading Brazilian sugar, for instance, you need to know and understand the Brazilian sugar industry. You need to be able to answer questions like:

What is Brazil’s production capacity?
Who are the major producers?
When is the peak season?
What are current market rates for Brazilian sugar?

Many get caught out in sugar scams because they are lured by promises of impossibly large shipments for ridiculously low prices. Many times the trader being scammed does not know that the shipment they are being promised is pure fantasy, because they do not understand the market.

For instance, take the following example. A scammer offers 20 million tons of Brazilian ICUMSA 45 sparkling white sugar.

Suzie Trader leaps at the deal, not knowing that shipments of millions of tons of ICUMSA 45 sugar are virtually impossible to obtain for a new buyer. In reality, Brazil produces relatively little ICUMSA 45, and the bulk of it is sold ahead of time to traders who purchase it on the futures markets. Small amounts of Brazilian ICUMSA 45 can occasionally be obtained if there is a surplus after harvest, but new entrants to the market will not be able to secure large shipments in their first foray into the market.

In spite of this being fairly common knowledge which can be obtained with just a little research, many people are scammed out of millions of dollars after attempting to buy several million tons of ‘discounted’ ICUMSA 45 Brazilian sugar.

Know The Price

All commodities have a price, and whilst small fluctuations occur, and discounts can be gained by purchasing in bulk, reputable traders still sell commodities at market rates. If the market rate for sugar is currently 10 cents a kilogram, offers selling sugar for 3 cents should be immediately discarded. Those who try and take advantage of such deals are usually the first ones to be taken advantage of themselves.

Scammers sometimes try to explain away the lowered price by claiming that another sale fell through, or that the material they are selling is ‘excess’. Don’t be fooled by such claims. Every commodity has a market value for a reason - there is a demand for it. If a supplier genuinely has a commodity in their possession which is worth a certain amount there is no way that they are going to contact an hitherto unknown trader and try to sell it to them at a reduced price. Think about it, if you had a car to sell, even if it was a spare car, would you sell a $50,000 machine for $500? No.

Google Is Your Friend

The Internet provides a vast resource for traders. Simply Googling the details of a potential trade can unearth useful and relevant information, and save a trader a great deal of wasted time and potential fiscal loss.

Then there are multiple forums where traders congregate and share tips and information. These places are veritable mines of information, and while none of it should be taken entirely at face value, it will point you in the right direction. These are excellent places to make new contacts and to deepen your understanding and knowledge of trading. Time spent learning more about your field is never wasted time, as even small snippets of information picked up in the course of conversation can prove to be invaluable later on.

Common Sense Is Your Ally

Tales of scams are sometimes as ridiculous as they are sad. In some cases, traders are lured to foreign countries under the pretense of ’seeing the goods’ themselves. Of course, they are also encouraged to bring with them cash to exchange for the goods. Those who take scammers up on these types of offers can quite often end up dead, killed for the cash they trustingly brought with them.

In today’s world, no trade should require you to carry large amounts of cash on your person at any time. The only possible reasons for anyone to do this are illegal ones. Cash is a means of avoiding the prying eyes of the law, and those who wish to avoid the eyes of the law are not the ones you want to be dealing with.

Don’t Be Afraid To Offend Your ‘Friend’

If a potential buyer or seller becomes offended because you background check them, their firm, and their credentials, it is wiser not to deal with them. The scammer will always try to develop a personal relationship with you in order to make you trust them. Your attempts to check them out independently will therefore be tantamount to betrayal of your new ‘friendship’. Remember that this is business, and that your money, your reputation and indeed your life could be at stake.

Those who take themselves seriously as traders do develop friendships and business relationships, but they do not allow them to supersede common sense. A reputable trading partner will not only not mind you investigating and verifying them, they may well encourage it, or provide references. Once again, these references should not be taken at face value, but should be investigated as well. Do the referees actually exist? Did the trades they claim to have undertaken with this person actually take place?

Being a successful trader is not unlike being a detective, and though it may be time consuming to delve into the backgrounds of new trading partners, it is infinitely more time consuming to be scammed.

Get Global

Becoming familiar with the country with which you are trading is also wise. Understanding business practices in the jurisdiction with which you are trading will help you evaluate whether your partner is acting in good faith, or if they are setting you up for a scam. There are variances from country to country.

Being familiar with the practices and laws of your trading partner’s country will also allow you to investigate them more thoroughly. The best way to learn about a country you wish to do business in is to contact your embassy in that country. Embassies are goldmines of ‘on the ground’ information, and they are usually pleased to assist citizens in their dealings with the foreign state.

As has been mentioned in previous sections, in some countries scams aren’t just run by small time scammers, they are run by large organized crime groups who can sometimes own entire banks. In these cases, a little research is not enough, because the corruption runs right up into governmental and commercial ranks. This does not mean that you have no recourse however, it simply means that your knowledge base needs to be wider than the one your potential trading partner provides you with. Contacting your embassy in the country can provide valuable help in avoiding these types of scams, as these crime syndicates are quite often well known.

What’s Their Feedback Like?

Who are you dealing with? Who else have they dealt with? Scammers often pull up stakes once they have defrauded one victim and move on, this means that they often do not have much, if any ‘back story’. If the person you are dealing with claims to be very experienced and well established in his or her field but nobody has ever heard of them before, a large red flag is raised.

A little like Ebay, good traders have lots of positive feedback, an independently verifiable reputation, and a public history. It is always more of a risk dealing with a ‘new’ trader than one who has already proven their reliability and expertise in other areas.

 Commodity Trading Manual

Until now very few books dealt with International trading, importing and exporting. Books on international trading or commodity markets are generally geared towards large corporate purchasing or export managers. Up untill now Intermediaries such as Export Trading Companies and Brokers had to individually learn a complex system of application involving the highest levels of International finance. Those without experienced mentors in the industry were utterly lost. 

Terminology

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Many of these offers have been orbiting the planet for years. Some may have originally been real and reliable trade opportunities which then got altered, sanitized, un-sanitized, by every other trader whose hand it fell in, passed by email, fax, post, and fax again through hundreds of hands, uploaded to a BBS in 1993, posted on Newsgroups in 1995, saved to a hard disk untill one broker, down on his luck dug it up and not understanding the time-limited nature of any offer and quote, re-used it in the desperate attempt to find a buyer, then it was posted and downloaded again, and again, and again, etc…

The reality is that apart from these continuous “traveling offers” wandering the internet like ghost ships, there is another, darker, more sinister traveler involved.. This type of offer is a scam offer, posted years ago by a “seller”, who was in reality a scammer.

And a patient one at that…

That scam offer is passed on by sincere brokers and intermediaries untill it finds the one in a thousand person or company willing to accept it and post money for the shipment… and quickly like fire excitement buzzes through the broker network, calls are made, NCND’s are signed, faxed, signed again, details are passed from hand to hand and if the deal doesn’t collapse due to lack of knowledge and skill on part of a particular trader, or due to greed on the part of another broker, the “deal” makes it’s way home to it’s master, who ensures that everyone is circumvented on his non existent product and he dines well that night on ill gotten gains, leaving scores of disillusioned intermediaries and the buyer behind.

And all of this, simply further destroying the business of the private trade intermediary.

Every broker in above mentioned scenario was a victim, and every broker in the chain was also to blame on some small level for the total failure of all. And the buyer who was defrauded, if only he had done his due diligence and actually do some research on the sugar industry or at least ask questions of people who should know, this could all have been avoided.

We encounter Sugar buyers who are seduced by absurdly low prices offered in various FCOs, floating around on the internet, some reflecting real market prices from long ago, as the same offer is copied over and over again by broker after broker for years even! Give such one a bargain price and greed will set in quickly.

Always investigate a matter before you invest in it, no matter who the seller or broker is. If the price is too good to be true, then it most certainly is.  There is an old saying: - “In god we trust, everyone else we verify, verify, verify!“

Brazilian Sugar

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20 years ago if a buyer wanted to purchase sugar from Brazil, he had to deal with one central selling agency. Now he can buy directly from the Brazilian sugar mills or even foreign companies (investment funds) who own large sugar allocations, etc. Today the buyer can build and run his own terminals, deal in Brazilian domestic market and even invest in the sugar production process. Admittedly it is risky and the risks have to be priced accordingly but the choice now exists where it did not before.

Better education as a result of increasing wealth in developing countries has increased the sophistication of both producers and consumers. Nowadays producers and consumers often take over the role of the traditional trade houses. Middle East sugar refiners are negotiating purchase contracts directly from Brazilian producers. Russian importers buy FOBs (free on board) and ship the sugar themselves. Brazilian producer groups deliver their sugar to the New York future exchange, etc. Nowadays everyone seems to be in the “Do it Yourself” sugar trading business. Naturally because of that the market is full of amateur traders, brokers, agents, even scammers who throw around prices as if they are selling cookies. It is often difficult to filter out the “noise” and find real suppliers.

95% of the enquiries we get are from “agents” who are just fishing for info (prices, suppliers, etc..) and have no intention or capability to actually purchase sugar. We don’t mind working with brokers but you have to follow procedure as outlined below. If you have to use us as your source of education, there is plenty of information published on this website and you are free to use it but please understand that we have to reserve our time for the real buyers and will not reply once we determine that you (or your buyer) cannot perform according to procedure specified below.

Sugar Ordering Procedures

(1) Quote is issued then returned filled in as accepted (Non legally binding)
(2) Offer is issued - which the End Buyer returns as accepted (Legally binding)
(3) Draft contract is issued/negotiated upon and returned as accepted.
(4) End Buyer issues Pre Advised Documentary Letter of Credit as per offer/contract
(5) Proof of Seller’s interests - verifications of goods advised as per contract
(6) Pre Advised Documentary Letter of Credit reverts to a fully active Documentary LC
(8) Performance guarantee is issued by the seller as per UCP600 Stand-by Letter of Credit rules.
(7) Delivery is initiated by document presentation as per offer/contract
(8) Collection is applied per each shipment until final delivery

Payment terms:

The Buyer shall open a UCP600 Irrevocable, Non transferable, Confirmed, Pre-advised Documentary Letter of Credit, payable 100% on sight, valid for the duration of the contract period for an amount in US dollars sufficient to cover one hundred percent of one month (100%). If multi shipments are advised, the the credit shall be opened as non cumulative, revolving.

Performance Guarantee:

(LDD) Late delivery discount to apply as a Performance guaranttee if delivery is late. P.G. LDD will be advised on offer and is enforced by the contract.

The above procedures and payment terms are the least expensive of all Documentary Letter of Credit applications. Once the pre-advised credit is opened and accepted, full proof of interest is advised which converts the credit into a full active instrument.

As you are aware a Documentary Letter of Credit (DLC) is financially worthless (it cannot be cashed) untill all the required delivery documents have been provided and accepted by your own bank issuing the credit.

Buy Sugar from us

Please contact us through this form below and let us know your detailed requirements.

Brazilian Sugar

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White sugar is refined sugar processed from the natural sugars which can be found in sugar beet or sugar cane. The industry name for the sparkling white sugar which is often known to consumers as ‘table sugar’, is ICUMSA 45. The name ICUMSA 45 is taken from the body which regulates sugar testing methods, known as the International Commission For Uniform Methods Of Sugar Analysis. ICUMSA testing allows suppliers and buyers to know with precision just how refined a sugar sample is, and provides an accurate rating system for trading sugar internationally. In most Western and developed nations, the only refined sugar approved for sale to the general public is ICUMSA 45 sugar. Other types of white sugar include ICUMSA 100 and ICUMSA 150, refined white sugars that lack the clear sparkling appearance of ICUMSA 45, but which are nonetheless still safe for human consumption.

Why White Sugar?

Since the time that effective sugar refining techniques were developed, white sugar has been a favorite of consumers and governmental regulating bodies alike. The main, and most practical reason for this is the fact that highly refined sugar is the safest type of sugar for consumers in terms of contamination levels and bacteria counts, having very low levels of both. The white coloration does not arise from additives or bleaches, but rather from the processes used to remove contamination from raw sugar, which is a deep brown color, and contains a great deal of undesirable elements, including high bacteria counts which can cause severe illnesses in humans.

How Is White Sugar Made?

White sugar is refined from raw sugar, which is usually extracted from sugar cane juice. Both sugar beet and sugar cane are natural sources of sugar, however sugar cane is more plentifully cultivated, and therefore most of the world’s sugar originates from this source.

Refined sugar is essentially pure sucrose, and there is very little difference between sugar extracted from sugar cane and sugar extracted from sugar beet. Only careful chemical analysis can determine whether a sugar sample was made from sugar beet or sugar cane, so practically speaking there is no difference between the sources.

Raw sugar is usually transported to the refinery, which may be in a different country from the mill in which it was produced. Some mills are also refineries however, and specific configurations differ from country to country, and facility to facility. When raw sugar arrives at a refinery, it can be in one of two forms. Most raw sugar products are now VHP raw sugar, processed raw sugar which whilst not being refined in the proper sense, contains a higher sucrose content and lower contamination level than traditional raw sugar. It is normally a light brown color, and can be refined in one step using a process called ‘carbonization’.

Carbonization involves dissolving the sugar into a liquid solution and then adding milk of lime. The milk of lime travels through the solution, forming calcium carbonate as it goes. As calcium carbonate forms it attracts the colorants and contaminants in the solution, and it locks them away as it falls to the bottom of the carbonization chamber. By the end of the carbonization process, all that is left in the sugar solution is water and sucrose. This solution is then boiled to remove the excess water, and the sucrose is crystallized.

If the refinery is working with raw sugar however, there is an additional step undertaken prior to carbonization. Called ‘affination’, this process involves the raw sugar being mixed with a high sucrose syrup to form a mix called magma. This magma is sent into a centrifugal chamber, a chamber which spins at very high speeds. As the magma is spun, it separates into liquid and solid components. The solid components are sucrose crystals, and the liquid is made up of everything else in the magma. The sucrose crystals still contain a level of contamination however, and are a brown color, but the bulk of the brown sticky mess which characterizes raw sugar is left in the liquid drawn off during affination, and is known as molasses.

The sucrose crystals are gathered after affination and then sent on to the next stage of the refining process, carbonization.

Is White Sugar Healthy?

White sugar is sometimes referred to as being an unhealthy food product because it is refined, and therefore falls into the ‘processed’ foods category. In many cases people misunderstand what this means and think that like other processed foodstuffs, white sugar has had dangerous chemicals added to it. This is of course, not the case. The refining process is designed simply to remove unwanted elements from raw sugar and to create a product which is as close to being pure sucrose as is possible.

Ironically, those who choose to use ‘brown’ sugar instead of white sugar do consume more additives, as most brown sugar is simply large crystal white sugar with colorants added. Brown sugar is not to be confused with consumable raw sugar, which is a brown color, but which usually has a completely different texture, ranging from crunchy to crumbly, and has a unique flavor which is due to the molasses still being part of the sugar. Consumable raw sugars do contain more healthy ingredients such as potassium, calcium, magnesium and iron, but they must also undergo various purification processes in order to make them safe for consumption.

 White Sugar Supplier

Please contact us and let us know your detailed sugar requirements and we will get back to you with product availability and price quotation shortly

Brazilian Sugar

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Refined sugar is the most popular and well known sugar in the developed world. Everybody knows what ICUMSA 45 sugar looks like, even if they don’t actually know what the term ‘ICUMSA 45′ means. Of course, those in the sugar industry know that this term is used to describe highly refined, sparkling white sugar – or white sugar, as it is known to most consumers.

The process by which sugar is refined is very interesting. After all, sugar starts off in life as a piece of cane, or perhaps even a beet, and when the brown raw sugar juice is first extracted from the cane or beet, it hardly seems likely that the sparkling white crystals that are spooned over cereals and into cups of coffee in millions of homes the world over could have originated from such an unlikely place.

There are many ways to refine sugar, though the different processes used in refineries across the globe normally follow a series of basic steps. In no particular order, these steps are boiling, centrifuging or affination, crystallization, and carbonization. These steps are generally combined in a variety of different ways to purify sugar, remove the unwanted coloration, and produce high quality sugar that is suitable for human consumption.

The typical sugar refining sequence goes thus: boiling, centrifuging, carbonization, boiling, crystallization, and finally centrifuging once more. This is far from being set in stone however, much like the old adage about skinning a cat, there is more than one way to refine sugar. Some refineries may repeat one step several times, but miss others out completely, such as in the Russian ‘one strike’ refining technique, which involves no centrifugal stage whatsoever, but a much more intensive carbonization stage which uses a great deal of milk of lime to remove impurities.

A typical generic refining process is outlined here in order to explain the various stages in greater detail.

As has been mentioned, sugar starts life as either sugar beet or sugar cane. It makes no difference to the final product whether sugar is extracted from beet or cane, and which is used generally depends on the climate in which the sugar is being produced. Sugar cane does better in tropical and subtropical climates, whereas sugar beet can withstand colder conditions. In either case, the sucrose needs to be extracted from the plant in order to make sugar. Sugar cane is relatively simple to extract sucrose from, as it has a high moisture level, and shredding and crushing the cane results in sucrose rich juice pouring out. Sugar beets, which are less popular than sugar cane as a source of sugar, but which can grow in conditions that sugar cane would die in, as for instance in the icy Russian climate, require a little more processing. Sugar beets are normally washed and thinly sliced, then placed into a hot water diffuser, where, like thousands of little tea bags, they are subjected to flowing hot water which leeches the sucrose out of the flesh of the beet.

In the case of refining sugar from sugar cane, once the raw juice has been extracted it is necessary to process it to extract the sucrose from the raw brown juice. In some cases the juice may first be boiled to reduce water content, or strained to remove any large particles of cane or beet which have snuck through into the juice.

Raw sugar is produced by evaporating the water away, leaving a thick brown mass of sugar which can contain a great deal of bacteria and other contaminants.

In order to refine it into ICUMSA 45 sugar, it must undergo several stages of refining. In the first of these, a process known as ‘affination’, the raw sugar is mixed with a thick, high sucrose liquid. The mixing of the sucrose liquid and the raw sugar creates a substance called “magma”. This magma is then sent into a centrifugal chamber and spun at high speed. Spinning the magma in this way separates the solid crystal parts of the sugar out from the brown liquid, which is known as molasses.

An alternative to this procedure is not to evaporate the water from the raw sugar juice but to simply boil it, allow it to crystallize, and then centrifuge it to remove the sugar. The sugar that emerges from this process is VHP sugar, a raw sugar with a very high sucrose content which can then be sent straight to the carbonization or phosphation stages of refining.

During production of VHP sugar, the liquid that driven off from the sugar in the first centrifugal process is known as first molasses. This will be boiled and centrifuged again to produce second molasses, and then once more to produce third molasses, otherwise known as blackstrap molasses. The sugar from these two centrifugal stages is dissolved in water and then centrifuged once more to create more VHP sugar. VHP sugar was originally a product of Brazil, and it is still Brazil’s most plentiful sugar export.

In some mills, especially Brazilian mills, this is all the processing that the sugar will undergo. VHP sugar is then sent off to other refineries, generally in other countries.

Whether a refinery is working with imported VHP sugar, or whether it has taken raw sugar and partially purified it through affination, it is necessary to remove the coloration and microscopic contaminants that are still present in the sugar.

This is achieved by a process called carbonization, which involves dissolving the sugar crystals in to a solution that is 50% sugar and 50% liquid. Milk of lime is then added to this solution, and as it travels through the solution it forms calcium carbonate deposits which attract impurities and lock them away inside the deposits. The calcium carbonate settles at the bottom of the tank and is separated from the solution which is now entirely sucrose and water. An alternative to this process involves the use of phosphorous, which performs a very similar function, cleaning out impurities and leaving only sucrose in the liquid solution. If phosphorous is used, this stage is usually known as phosphation.

Once the decontamination and decolorization stage is finished, it is time to remove the water and let sugar crystals grow. In order to achieve this, the sucrose and water solution is boiled to remove the excess water, and sugar dust is sprinkled into the concentrated solution to encourage the growth of sucrose crystals. Once grown, the crystals are once more spun in the centrifugal chamber to remove the remaining liquid.

Et voila. The final product is highly refined sugar, free from contaminants and ready to be packaged and shipped to supermarkets for consumers to purchase, or to manufacturers who will use it in foodstuffs.

Sugar from Brazilian Sugar Refineries

We source directly from Brazilian sugar refineries. Please contact us and let us know your needs. We will get back to you with a price quotation within a few hours.

Icumsa 45

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A soft quote can be obtained by contacting us and outlining the details of your desired order. We will need information pertaining to the quantity of sugar required, the type of sugar required, the grade of sugar required, and any other requirements you may have. We will also need to know the intended destination port for shipment, and the type of payment you are prepared to make (Letter of Credit, etc) in order to provide a soft quote.

May I See Your Price List?

Unfortunately there is no price list available for viewing by potential buyers, simply because such a document does not exist. Sugar prices fluctuate daily due to the fact that sugar is a commodity freely traded on various global commodities markets.

The price of sugar is affected by many factors, such as the cost of oil, which greatly impacts on transportation costs. As sugar is sold CIF (Cost, Insurance, Freight), oil prices have an immediate effect on sugar prices.

The method of payment which a prospective buyer is prepared to use is also a factor in determining the price of sugar. Sellers like safe forms of payment, and not all forms of payment are created equal, so preference and lower prices are given to buyers who are willing and able to make payment according to the seller’s preferences.

What Is The Preferred Method Of Payment?

The preferred method of payment is a Bank Guarantee, however a Standby Letter of Credit or a Fully Funded Direct Letter of Credit are also acceptable. In all cases, the financial instrument must be issued or guaranteed by a Top 25 world bank. Letters of credit must be transferable, divisible, and payable on sight. If the sugar is to be shipped in installments, then the letter of credit must revolve to cover each subsequent shipment.

What Forms Of Payment Are Unacceptable?

Neither non transferable letters of credit and revocable letters of credit will be accepted as payment.

When Must Payment Be Made?

Payment becomes due upon delivery (however there is a guarantee in place in form of Stand by Letter of Credit way before first shipment takes place).

What Documentation Will Be Needed To Obtain A Firm Corporate Offer?

Several items of documentation will be required in order to successfully negotiate a shipment of sugar. The soft quote is the first piece of documentation the buyer will receive. If the terms of the soft quote are agreeable, then the buyer will be required to sign a NCND (Non Circumvention, Non Disclosure agreement). This document provides necessary protection to both the buyer and seller as they move forward in the trading process. A Letter of Intent (or Irrevocable Corporate Purchase Order - ICPO) is the first piece of documentation required from the buyer, and it should be accompanied by a Bank Comfort Letter - BCL. When these documents have been received and verified, a Firm Corporate Offer (FCO) will be issued to the buyer.

How Recent Must My Letter Of Intent Be?

In order to proceed in good faith, the seller requires that the LOI (Letter of Intent) is no more than ten days old.

Do I Need To Supply Bank Details With My Letter Of Intent?

Yes. The seller requires bank details to be submitted with an LOI / ICPO in order to conduct a soft probe of the buyer’s accounts. The soft probe is used to gather evidence that the buyer is able to cover the cost of the trade, and provides assurance to the seller that the proposed trade is viable.

The buyer’s Letter of Intent therefore must include bank details, authorization for a soft probe, and contact details for the buyer’s banking officer.

Why Does It Take So Long To Get A Firm Corporate Offer?

Buyers occasionally express frustration that obtaining a FCO is a lengthy process. In order to expedite the receipt of a FCO, the buyer should take care to provide all required documentation in a timely fashion. The seller will need time to assess the letter of intent, conduct a soft probe on the buyer’s accounts, and verify that the buyer is acting in good faith before they are able to issue a FCO. This should take about 2 working days.

Can I See SGS Reports Prior To Sending An LOI?

No, sellers do not supply SGS reports prior to opening negotiations. Proof of product is provided at a later state in the negotiation process. At the time that the seller requests a PoF (Proof of Funds) from the buyer’s bank, the seller will also provide a PoP, (Proof of Product.) These documents are handled bank to bank, not from the seller to the buyer or vice versa.

Who Pays For SGS Inspections, And Where Do They Take Place?

SGS Inspections are paid for by the seller, and are carried out at the port of loading.

Can I View Sugar Before Committing To Purchase?

In most cases no. This is because the sugar may very possibly not have been produced yet. Due to the nature of the sugar industry, it is not uncommon for sugar to be sold in advance of production. The seller will have a contract with a refinery to produce the sugar, and the sugar will be shipped to the buyer over a period of months. Unlike other commodities, it is highly unlikely that there will ever be a warehouse full of sugar simply waiting for a buyer.  However, you can see it at loading time.

Can I Order a Trial Shipment?

Buyers are free to order any reasonable quantity of sugar they desire, however they should be aware that the seller will not regard any shipment as a ‘trial’ shipment, and that no extra sugar will be held in reserve for a buyer for subsequent orders. The price will be based on the ordered quantity.

What Is The Standard Procedure?

The standard sugar trading procedure is CIF, or Cost, Insurance, Freight. The seller must prepare the goods for shipment, pay shipping costs, pay insurance on the shipment, and also organize and pay for SGS inspections. Only after the sugar has been delivered does the seller receive payment for the shipment.

Can This Procedure Be Changed?

Generally speaking, no. The standard procedure is in place due to the fact that it is regarded as providing the highest possible levels of protection to both sellers and buyers.

I Am A Broker, How Will My Commission Be Secured?

All soft quotes include a broker fee of one dollar per metric ton. If you wish to charge a higher brokerage fee, you will need to double it and add it to the per ton price of the soft quote, as added commissions are shared between suppliers and brokers. For example, if you wish to be paid an extra dollar per ton, you will need to add two dollars per ton to the soft quote before presenting it to your client.

I Need Several Million Tons Of Sugar, Can You Supply Me?

Sugar is not usually sold in such large amounts because the cost is prohibitive. If you are in the unique position of having funds in place to cover the full amount of such an order, and can provide a Stand-By Letter of Credit (or Bank Guarantee) covering several months worth of shipments and thus guaranteeing payment to the seller, then please contact us to discuss your requirements.

If you have any further questions, feel free to contact us.

Terminology

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Anyone even remotely familiar with the sugar industry knows that Brazil is the largest player in the market in terms of production, technology, and expertise. Sugar from Brazil can be found quite literally around the globe, as Brazil exports around eighteen million tons of sugar to various countries every year. Brazil’s largest trading partner is the Unites States, where the bulk of its sugar exports are sold. Other major trading partners include Argentina, China, and Japan.

Brazil produces two main types of sugar, VHP raw sugar, which is intended largely for the export market, and a smaller amount of ICUMSA 45 sugar, which is consumed locally, and a portion of which is also exported. In total, Brazil’s sugar production is in the neighborhood of thirty million tons, a quantity which can only be matched by India’s booming sugar production industry. At present, Brazil still dominates the export market, though India is continuing to increase its exports in spite of the fact that there is an 11 million ton global sugar excess predicted for the 2007/2008 period.

Sugar from Brazil comes from Sugar Cane

Brazilian sugar comes exclusively from sugar cane, which is grown in vast fields surrounding sugar mills and refineries. The bulk of these plantations and mills are located in the center south region of the country, in the Sao Paulo region. This is a flat, fertile region which is excellently suited to many different forms of agriculture. Due to the boom in the sugar market, and also the sugar ethanol market, a great deal of this region has been turned over from coffee production to sugar cane production. The expansion has been so great that the regional government decided to suspend licenses for any new sugar mills in May 2007, pending an environmental impact report.

There are also a great deal of sugar mills located in the northern regions of Brazil, in the states of Algolas and Pernambuco. This is the traditional home of Brazilian sugar, as these were the first states to have sugar plantations planted and mills constructed by the Dutch. This region is less suited to sugar cane growth as the soil is less fertile here, and the terrain much more rough and elevated. Unlike the center south region, where sugar cane is usually harvested by machine, manual harvesters are largely used in the northern regions because the terrain is simply not suited to machinery.

Due to the development of new strains of sugar cane, yield has been increased even in the inhospitable regions of the northern states, as the newly developed strains are much more hardy than the sugar cane which is used in many countries. This allows sugar cane to be grown in locations where it once would have been impossible to grow, and for the cane grown there to have a much higher sucrose content than would normally be expected.

Brazil’s domination of the sugar industry has not simply been achieved by turning over vast swathes of land to sugar cane growing, though this undoubtedly has happened. Attention has been given to every step of the sugar production process, from creating strains of sugar cane with much higher sucrose content than their fore bearers, to making the actual milling and refining processes as efficient as possible. Brazilian sugar mills usually employ a team of in house scientists to oversee various stages of the production process, to develop new and better production methods, and to conduct additional related research. So seriously does Brazil take the technical side of sugar production that it was the first country to take gene sequencing technology and use it to sequence the sugar cane genome.

Buying Sugar From Brazil

Buyers wishing to purchase sugar from Brazil should be aware that there are certain logistical restrictions on purchasing sugar. Many new buyers to the market see offers for millions upon millions of tons of sugar at cut rate prices and believe that they have found a good deal. Unfortunately for them, most of the time these dream deals turn out to be nightmares.

Sugar is normally traded at a fairly fixed price, which is determined by global supply and demand, and which can easily be researched by comparing prices between several vendors, and by referring to the various commodities exchanges upon which sugar is traded. Brazilian sugar is also not normally sold in multi million ton shipments, especially not as a ’special offer’ or any other such euphemism. If one wishes to secure large amounts of sugar, one should be prepared to commit to multiple shipments over a period of months, or even a futures contract, under which a supply may be secured years ahead of time at a fixed price. The market is rather low at the present time, so contracts secured now may prove to be lucrative in the future.

Sugar is almost always sold CIF, or Cost, Insurance, Freight. This means that the price secured will include the sugar, insurance on the sugar, and the freight on the sugar. Given current concerns regarding fuel prices, this makes futures contracts even more attractive, as prices are likely to rise substantially on freight alone in the coming months and possibly years.

It is also worth noting once more that the bulk of sugar exported from Brazil is VHP raw sugar. This is raw sugar with a sucrose content of 99.4% or higher. It is designed for easy refining into ICUMSA 45 in the destination country, but it is not ICUMSA 45 itself. Offers for large amounts of Brazilian ICUMSA 45 sugar should therefore be viewed with extreme skepticism. A larger amount of refined white ICUMSA 150 sugar is available for export, though ICUMSA 150 is not approved for sale directly to customers in most developed countries, it may be acceptable as an ingredient in some cases.

When purchasing Brazilian sugar, it is always wise to spend time researching the market and comparing various offers. Because sugar is traded globally it tends to be a largely homogeneous market. Offers dealing in sugar from Brazil which is offered in abnormally large amounts and/or at abnormally low prices are almost certain to be a scam.

Brazilian Sugar Exporters

We work directly with a Brazilian co-op which is in control of over 200 sugar mills. We also work with several big hedge funds who own Brazilian sugar allocation in large quantities at any given time. Please contact us through this form below and let us know your specific requirements. We will get back to you with sugar price quotation and availability within the day.