Agriculture desk · Oils, grains and softs
Cargo that spoils if you are slow.
Vegetable oils, grains, rice, oilseed meals and softs, traded on the association forms the market already knows — priced against the exchange where one exists, and back to back where it does not.
- Contract forms
- GAFTA · FOSFA · PORAM
- Exchanges
- CBOT · ICE · BMD
Overview
The agriculture book
The agriculture desk trades vegetable oils, grains, oilseed meals and softs, priced as a differential to the exchange rather than flat, and executed on the trade association forms the market already knows.
Agricultural cargo degrades. Moisture migrates in a hold, free fatty acid rises in a hot tank, and an infestation found at discharge is worth more as a claim than the parcel is as a sale. Execution on this desk is quality control with a ship attached.
Deforestation regulation has become a commercial constraint rather than a reporting one. Traceability to the plot of origin is recorded at load for palm, soy, cocoa and coffee, because material that cannot be traced cannot be sold into the European Union at any price.
Rice sits inside this desk and behaves unlike anything else in it. Around a tenth of world production ever crosses a border, there is no futures contract deep enough to hedge on, and an exporting government can close its market overnight. We trade it back to back against published origin quotes and price the policy risk rather than assuming it away.
Products
What we trade, and to what specification.
| Product | Specification | Notes |
|---|---|---|
| Crude palm oil | FFA 5% max, M&I 0.25% max | Indonesian and Malaysian origin into refiners |
| RBD palm olein | IV 56 min, cloud point 10°C max | Bulk and flexitank into South Asia and West Africa |
| Milling wheat | 12.5% protein, 76 kg/hl | Black Sea and Baltic origin into millers |
| Feed corn | 14% moisture max, GMO status declared | Into compound feed and starch processing |
| White rice | 5% and 25% broken, moisture 14% max | Thai and Vietnamese origin, bagged and containerised |
| Parboiled rice | 5% broken, milled from steamed paddy | Indian origin into West Africa and the Middle East |
| Fragrant rice | Thai Hom Mali and basmati, crop year declared | Into retail packers and Gulf distribution |
| Soybean meal | 46% protein minimum, hipro | Into feed formulation across South and East Asia |
| Raw sugar | 96 degrees polarisation, VHP | Brazilian and Thai origin into refineries |
| Robusta coffee | Screen 16, 12.5% moisture | Vietnamese and Indonesian origin into roasters |
Commercial terms
How a cargo is priced and settled.
The headline price is rarely the price. These are the terms that decide what a cargo is actually worth by the time it is discharged and invoiced.
- 01Contract form
- Grains and pulses trade on GAFTA forms, oils and fats on FOSFA, palm oil on PORAM, and refined sugar under Refined Sugar Association rules. The form settles the defaults on quality, weights, force majeure and arbitration before a single rider clause is negotiated.
- 02Pricing basis
- Cargo is priced as a differential to the exchange rather than flat — CBOT for wheat, corn and soybean complex, ICE for raw and white sugar and for both coffees, and Bursa Malaysia for palm oil. The palm contract settles in ringgit, so a dollar book carries a currency leg that is hedged separately from the flat price. Rice is the exception, and is set out below.
- 03Rice, priced without an exchange
- There is no rice futures contract liquid enough to hedge a physical book on. Rice prices off published origin quotes by grade — Thai, Vietnamese, Indian and Pakistani FOB assessments — and the differential between two origins for the same nominal grade is wide and persistent. Because the position cannot be covered on paper, we match a purchase to a sale rather than carrying it.
- 04Brokens, and blending to grade
- Broken percentage is the primary grade descriptor and the principal lever on a rice cargo. A parcel is assembled across mill lots to land exactly on the contractual 5% or 25%, with sealed samples drawn from the blended parcel rather than from its components.
- 05Export policy and state tenders
- Rice is a food security commodity before it is a traded one. Exporting governments impose bans, duties and minimum export prices at short notice, and a large share of the trade clears through state buyers on tender, against bid and performance bonds and fixed shipment windows. A purchase not yet shipped can be overtaken by a policy change, so origin risk is priced into the offer.
- 06Weights and quality final
- Whether certificates are final at load or at discharge decides who carries the outturn risk on a cargo that can change in transit. It is the most consequential line in an agricultural contract and it is agreed before the price is.
- 07Superintendence and samples
- An independent superintendent draws and seals samples at both ends, analysed to the method named in the contract rather than the laboratory's preference. Sealed retention samples are held for the full arbitration period.
- 08Arbitration window
- GAFTA and FOSFA disputes go to their own arbitration in London on a timetable that runs from the contractual event, not from when the problem was noticed. A claim filed outside the window fails on time bar regardless of its merit.
- 09Traceability and deforestation
- Palm, soy, cocoa and coffee sold into the European Union require geolocation data for the plot of origin and a due diligence statement. Certification schemes sit on top of that requirement, not in place of it. Material we cannot trace to plot is sold into non-EU destinations or not bought.
Trade routes
Origin to destination.
Origin
Indonesia and Malaysia
Destination
India, China, Northwest Europe
Palm oil in IMO 2 parcel tankers, and flexitank on smaller lots
Origin
Black Sea and Baltic
Destination
North Africa, Middle East
Milling and feed wheat on Handysize and Supramax
Origin
Brazil and US Gulf
Destination
South and East Asia
Corn and soybean meal on Panamax
Origin
Thailand and Brazil
Destination
West Africa, Middle East
Raw sugar in bulk, refined sugar in bags
Origin
India, Thailand and Vietnam
Destination
West Africa, the Philippines, Indonesia
Rice bagged and containerised, and in bulk against state tenders
Execution
How the cargo actually moves.
- Coated and stainless parcel tankers for vegetable oil, with the three previous cargoes checked against the FOSFA list before a vessel is nominated
- Shore tank capacity at origin and discharge, with heating and nitrogen blanketing where the specification requires it
- Fumigation and phytosanitary certification at load, to the importing country's requirement rather than the exporter's habit
- Bagging and containerisation for sugar and rice into West African discharge ports
- Rice loaded at anchorage off the Mekong and Gulf of Thailand terminals, where draft limits the vessel that can come alongside
- Crop year declared on every rice parcel, old crop and new crop kept apart in store and in the contract
- Sealed retention samples held at both ends for the full arbitration period
- Traceability to plot recorded at origin on material that may be sold into the European Union