Swiss-based Cerealia SA says its platform will ensure certainty of trades.

Traders of physical crops such as wheat, sorghum, corn, and barley, conducting their trades by telephone in Russia and Europe, now have a digital platform as an alternative. Cerealia SA, based in Pully, Switzerland, has thrown open its blockchain-based physical agriculture trading platform for commercial use. (BNN Bloomberg)

Cerealia’s platform

Cerealia claims to be the first professional online marketplace for international physical agri-trading that allows for certainty of contract.

Verbal negotiations, without proof of time, firm, or quote, are commonplace in today’s commodity markets. Often, disputes arise and transactions fail.  This results in a narrowing of the market because large players prefer to deal with only known and trusted counterparties.

In emerging countries, the problem is compounded because of the unorganized nature of their commodity markets and the nonavailability of formal training venues such as in the developed world.

Traders in these countries also have perforce to deal in the US dollar. They often lose money due to FX volatility, besides having to pay exorbitant trade finance interest rates.

Cerealia told Bloomberg that traders, particularly in Russian wheat, now have access to its blockchain-based platform allowing for speed of transaction and traceable execution.

Advantages of the platform

Cerealia says on its website that its platform has effectively created a new market where traders can place their “interests” via firm e-bids/offers.

Executed contracts are authenticated instantly with a timestamp and advanced e-signatures (AdES) using customized, intuitive e-templates.

All interactions are recorded permanently on a fast blockchain network.

“Traders can now be 100% certain they really did the trade, versus traditional over-the-phone brokerage,” said Andrei Grigorov, Cerealia’s chief executive officer. “Instantly, they have digitally signed contracts and blockchain-registered records ‘forever.’”

The platform has been tested rigorously since 2018. Firms from Japan, Dubai, Ukraine, Turkey, Algeria, and Brazil participated in testing during a recent prelaunch period.

Global interest in blockchain-based trade

Earlier this month, Bangladesh executed its first cross-border (Letter of Credit) LC transaction for the import of 20,000 tonnes of fuel oil from Singapore on the blockchain through HSBC.

United Mymensingh Power Limited imported the fuel oil from Singapore and the LC marked the first transaction between the two countries on the Contour platform.

The Contour platform is a decentralized trade finance network that uses distributed ledger technology using R3’s Corda blockchain platform.

In September, Rio Tinto and Guangxi Shenglong Metallurgical successfully conducted an iron ore LC transaction on the same Contour network.

Related Story:      HSBC Bangladesh Transacts 20K Tonnes Of Fuel Oil On The Contour Platform