What is structured commodity finance?
Structured commodity finance (SCF) is a sophisticated commodity-based financing technique, specifically designed for commodity producers and trading companies doing business in the developing markets. Introduced in the early 1990s, SCF continues to play an important role, providing liquidity management and risk mitigation for the production, purchase and sale of raw, semi-refined or semi-processed materials. SCF funding solutions include a variety of pre-export finance, toll finance, counter-trade finance, and others. SCF can be applied across part or all of the commodity trade value chain: from producer to distributor to processor, and of course, the physical traders who buy and deliver commodities in the international and domestic markets. SCF financing is primarily based on performance risk and as such is particularly well suited for companies doing business in what are considered higher risk markets and industries. Understanding performance risk Unlike traditional financing which l
