New York — Coffee traders are demanding a prepayment for the New Deal to sell beans to Russia as Western sanctions have hit the financial system of the world’s sixth-largest importer.
Brazil’s traders, the world’s largest exporter and largest supplier to Russia, said they have added the country to the list of dangerous and licensed destinations that require prepayment, such as Syria, Lebanon and Iran. ..
“Currently, there is so much uncertainty about solvency that we only have 100% upfront payments for new transactions,” said Thomas Raad, a coffee broker who owns a trading company that regularly ships to dangerous destinations.
Jose Marcos Magallaes, head of the Minas R Coffee Cooperative, said a prepayment would be required for Russia’s New Deal, a regular customer.
He added that the co-operative would also need a transportation guarantee as the container line has restricted travel to Russia since the invasion of neighboring Ukraine.
Raad said he is currently in talks with a Russian buyer who sent a sample of coffee for approval, but has not yet discussed payments.
SWIFT, the international banking messaging system used for remittances, said Tuesday that it was waiting for instructions on which Russian banks should be separated from the system under sanctions.
The Brazilian Exporters Association Cecafe said changes to SWIFT could certainly affect transactions, but the situation remained unclear. Russia purchased 1.2 million bags of Brazilian coffee worth $ 177 million in 2021.
Raad said cryptocurrencies could be a payment option.
“I take the code because I’m familiar with it, but many exporters didn’t,” he said.
For it to work, Russian importers need to access a cryptocurrency broker that can complete both legs of payments, preferably using USD coins, which are digital stablecoins fixed in US dollars. Raad said there was.