Reference

Glossary of commodity trade terms.

Concise definitions of the commercial, documentary, banking and logistical terms most commonly encountered in institutional cross-border commodity transactions. Provided as a reference; binding meaning in any given transaction is established by the executed contract and the applicable governing rules.

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Commercial documents

LOI Letter of Intent: A non-binding written statement from a prospective buyer expressing interest in purchasing a specified commodity under indicative terms (product, volume, destination, target price, shipment window). Used to open structured commercial dialogue.
ICPO Irrevocable Corporate Purchase Order: A formal purchase order issued by the buyer stating firm intent to acquire a defined quantity of product under specified commercial terms. Typically follows acceptance of an FCO and precedes contract drafting.
FCO Full Corporate Offer: A formal commercial offer issued by the seller in response to a qualified inquiry, detailing product specification, origin, price, payment terms, delivery basis, shipment schedule and validity period.
SPA Sales and Purchase Agreement: The definitive binding contract between buyer and seller governing the transaction. Defines product specifications, quantity, price formula, delivery terms, documentary package, inspection, performance obligations, payment mechanism and dispute resolution.
NCNDA Non-Circumvention, Non-Disclosure Agreement: A confidentiality agreement protecting the parties' commercial relationships and disclosed information, prohibiting either side from bypassing the other to deal directly with introduced counterparties.
POF Proof of Funds: Bank-issued evidence that the buyer holds liquid funds sufficient to perform on the contemplated transaction. Format and acceptability vary by counterparty and bank.
POP Proof of Product: Documentation evidencing the existence, availability and quality of the cargo offered. Acceptable forms depend on the commodity and stage of the transaction; unverified POP requests outside a contracted framework are not industry practice.

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Banking instruments & payment

DLC Documentary Letter of Credit: An irrevocable undertaking by the buyer's issuing bank to pay the seller upon presentation of conforming shipping documents. Governed by UCP 600 and the cornerstone payment mechanism in physical commodity trade.
SBLC Standby Letter of Credit: A bank-issued guarantee of payment, drawn upon only if the applicant fails to perform a contractual obligation. Functions as a backup payment assurance rather than the primary settlement instrument.
MT700: SWIFT message format used by a bank to issue a documentary credit. Sets out the full operative terms of the letter of credit to the advising or confirming bank.
MT760: SWIFT message format used to issue a demand guarantee or standby letter of credit. Transmits the operative text of the undertaking from the issuing to the beneficiary's bank.
MT799: SWIFT free-format text message between banks, frequently used for pre-advice, readiness confirmations or general bank-to-bank communication. It is not itself a payment instrument.
MT103: SWIFT message format for a single customer credit transfer — i.e. an interbank instruction to credit a beneficiary's account. Used to evidence executed cash payments.
UCP 600: Uniform Customs and Practice for Documentary Credits, 2007 revision, published by the International Chamber of Commerce. The governing ruleset for letters of credit in international trade.
TT / Wire Telegraphic Transfer: Cash payment by bank wire, typically used for advance payments, balance settlements after presentation of documents, or smaller spot transactions.
CAD / DAP Cash Against Documents / Documents Against Payment: Payment mechanism in which shipping documents are released to the buyer only against payment, typically routed through the buyer's bank under a documentary collection.

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Delivery terms (Incoterms 2020)

Incoterms 2020: ICC ruleset defining the responsibilities of buyer and seller for delivery, risk transfer, costs and documentary obligations in international sales of goods. Must be cited with the named place (e.g. FOB Santos).
FOB Free On Board: Seller delivers when the goods are placed on board the vessel at the named port of shipment. Risk transfers to the buyer at that point. Applies to sea and inland waterway transport only.
CFR Cost and Freight: Seller pays cost and ocean freight to bring goods to the named destination port; risk transfers to the buyer once loaded on board at the port of shipment. Insurance is the buyer's responsibility.
CIF Cost, Insurance and Freight: As CFR, but the seller also procures minimum-cover marine insurance for the buyer's benefit up to the destination port. Risk still transfers on loading at the origin port.
FCA Free Carrier: Seller delivers the goods, cleared for export, to the carrier nominated by the buyer at a named place. Suitable for any mode of transport, including containerised shipments.

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Shipping, inspection & compliance

B/L Bill of Lading: Document issued by the carrier acknowledging receipt of cargo for shipment. Serves as evidence of the contract of carriage, a receipt for the goods and, when negotiable, a document of title.
Certificate of Origin Certificate of Origin: Document issued by a competent authority (typically a chamber of commerce) certifying the country in which the goods were produced. Required for customs clearance and to qualify for preferential tariffs.
Phytosanitary Certificate: Certificate issued by the exporting country's plant protection authority confirming that agricultural cargo complies with the phytosanitary requirements of the importing country.
Health Certificate: Sanitary certificate issued by the competent veterinary authority for animal-origin products (e.g. frozen chicken), attesting compliance with the importing country's sanitary requirements.
SGS: Société Générale de Surveillance — a leading independent inspection, verification, testing and certification company commonly nominated to inspect commodity cargo at loading or discharge.
ICUMSA: International Commission for Uniform Methods of Sugar Analysis. The ICUMSA value (e.g. ICUMSA 45) measures sugar colour in International Units; lower values indicate higher refinement.
KYC Know Your Customer: Mandatory counterparty due-diligence process covering identity, beneficial ownership, regulatory standing and sanctions screening. Foundational step before any binding commercial engagement.
AML / CFT Anti-Money Laundering / Counter-Financing of Terrorism: Regulatory regime governing the detection and prevention of illicit financial flows. Banks and trade counterparties must screen transactions, parties and origins of funds against domestic and international watchlists.
Demurrage: Compensation owed to the shipowner when a vessel is detained at a port beyond the agreed laytime for loading or discharge. Provisions are set in the charter party or sales contract.
Laycan: The agreed window of dates within which a vessel must present itself at the loading port. If the vessel arrives outside laycan, the charterer may have the right to cancel.
HS Code Harmonized System Code: Standardised numerical classification developed by the World Customs Organization to identify traded products for customs, statistics and tariff purposes.

/ Scope note

This glossary is informational. JBCC executes transactions under documented procedures and applicable rulesets (Incoterms 2020, UCP 600). Definitions here do not amend or override any executed contract.