Binkabi Commodity Monday #5 | View online in your own language

The Dollar Vanishing Club

Commodity Monday, 8 October

US sanctions drive revolt against the dollar in trade

Global Trade Review

Trade de-dollarisation has for many years been the last resort for countries subjected to trade restrictions. Today, as the US’ global ties continue to crumble as the result of an often-antagonistic trade policy on the part of President Donald Trump, a growing — and increasingly powerful — group of countries are looking at ways to trade without the dollar, reaching what could become a critical mass.

On Monday, standing shoulder-to-shoulder with Iran’s foreign affairs minister Mohammad Javad Zarif at the sidelines of the UN General Assembly, Federica Mogherini, the EU’s high representative for foreign affairs, announced the creation of a special purpose vehicle (SPV) designed to allow trade with Tehran in euros. The UK, France and Germany have said they will put the SPV into practice, with China and Russia also agreeing to lend their support.

At a trilateral meeting on September 7, Turkey, Russia and Iran announced a joint step towards dropping the dollar in trade in favour of national currencies. It came after the lira fell to an all-time low against the dollar following the Trump administration’s doubling of import tariffs on Turkish steel and aluminium.

Meanwhile, China is using its trillion-dollar-worth Belt and Road Initiative as a tool to internationalise the renminbi — Pakistan and Iran have already announced they will transact in yuan terms instead of dollars — and India has agreed to pay for Iranian oil in rupees through its state-run UCO Bank.


Singapore launches new digital trade platform to streamline end-to-end trade processes

Channel NewsAsia

Digitising trade documentation and processes will help raise productivity, boost competitiveness and create new opportunities, Singapore Finance Minister Heng Swee Keat said on Wednesday (Sep 26) at the unveiling of the new Networked Trade Platform (NTP).

Currently, a single trade can involve over 25 parties, generating 30 to 40 documents, as well as requiring 60 to 70 per cent of information to be manually re-entered at least once.

“If we can stitch the disparate standalone systems, or digital islands, together, and bridge the government agencies and business community, the potential value to the economy is significant and transformational,” said Mr Heng.

The NTP, which was developed by Singapore Customs and the Government Technology Agency of Singapore (GovTech), aims to do that as it functions as a single window for all customs and trade-related services.

Spotlight: Black Sea Agricultural Trade Gaining Ground

Gro Intelligence

The Black Sea region has abundant nutrient-rich soils and produces important crops like wheat, corn, and sugar beets. Historically, the sea has carried grain from Eastern Europe and Central Asia all over the world. Today, agricultural trade is growing thanks to sharply rising production and growing demand. Russia has increased wheat exports by nearly 50 percent in the last year alone, and has become the world’s top exporter of the commodity. This presents an opportunity for countries like those in northern Africa and the Middle East, who rely heavily on wheat imports to sustain their dependent populations, to have a cheaper supply close by.

The Madagascar Bourbon Vanilla Supply Chain

Vanilla is a world-renowned spice, known for its aromatic and soft flavor. For over 500 years, vanilla has been a prized commodity selectively sourced from only a few locations around the globe: Mexico, Madagascar, Tahiti, Uganda, and Indonesia, among a couple others.

In the past decade, vanilla has enjoyed a magnificent price appreciation: according to The Globe and Mail, the price of vanilla has increased 20 fold since 2011. Currently valued at close to $700 USD per kilo, vanilla is the second most expensive commodity in the world. Importantly, as a result of the spike in global vanilla demand, a dependency has been created specifically on the vanilla that is sourced from Madagascar, which produces over 50% of the world’s vanilla supply. Therefore, a traceability solution that works for the Madagascar Bourbon Vanilla Supply Chain is an important issue.

Using a QR code printed on the zip tie of a bundle of vanilla, the specific grade of the vanilla stock can be effectively recorded in line with the origin that has already been signed into the Ambrosus network, a blockchain-based traceability solution. Altogether, when the vanilla is bundled according to its grade and then packaged into its container, a QR code is also printed and stuck on top of the package, so as to refer to the specific vanilla stored inside.