Coffee traders are seeking advance payment in any new deal to sell beans to Russia as Western sanctions hit the financial system of the world's sixth largest importer.
Traders in Brazil, the world's largest exporter and number one supplier to Russia, said they have added the country to a list of risky and sanctioned destinations that require pre-payment, including Syria, Lebanon and Iran.
"Too many uncertainties right now in terms of their ability to pay, so new deals only with 100% payment upfront," said coffee broker Thomas Raad, who owns a trading company that ships regularly to risky destinations.
Advance Payment
Jose Marcos Magalhaes, head of the Minasul coffee co-op, said advance payment would be required in any new deal for Russia, a regular client.
He added that the co-op would also need assurances regarding shipping as container lines are restricting trips to Russia since its invasion of neighboring Ukraine.
Raad said he is currently negotiating with a Russian buyer, having sent coffee samples for approval, but had yet to discuss payment.
Transactions
Brazil exporters association Cecafe said changes to SWIFT, the international banking messaging system used for money transfers, could certainly impact transactions but the situation was still unclear. It said Russia bought 1.2 million bags of Brazilian coffee in 2021 valued at $177 million.
Raad said crypto could be a payment option.
"I would take crypto because I am familiar with it, but many exporters wouldn't", he said.
For that to work, Raad said, the Russian importer would need access to a crypto broker that can complete both legs of the payment preferably using the USD Coin, a digital stablecoin pegged to the US dollar.
News by Reuters, edited by ESM – your source for the latest Supply Chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.
