The sugar is produced, checked for quality and packaged for shipment.Shipping arrangements are made vessels and loading docks are booked and reserved.
Harvesting and delivery of the sugar cane to the refinery begins.The sugarcane has to be purchased for the entire contract.Only after this is security is in place the Seller / Producers work starts: After the signing of the contract the Seller / Producers Security has to be transmitted to the Seller / Producers bank and accepted there.Production sequence for 12 month contract orders and regular SPOT orders. This applies to all one year contract order and regular SPOT orders. Essentially, the Seller of any product which does not require processing at the time of sale and is already in storage should be able to provide at least partial Proof of Product.ĩ5% of Brazilian sugar is sold as future production. This also applies to Gold and many other commodities. The process is similar for minerals and most agricultural commodities. The mode of operation with crude oil is usually DIP – PAY – SHIP. If a Seller / Agent offers to provide sanitized POP on a product that has not yet been produced, you should walk away from that person immediately.ĮXAMPLE: Crude oil is already in the storage tank. In the sugar industry we are almost always dealing with future production. Has the product to be sold already been produced and is physically available to be viewed or surveyed or is the Buyer purchasing future production?
This ability always depends on the answer to one question: The success of the sale may depend on this.Įach industry has its own ability to provide Proof of Product. Every Agent should be prepared to explain this difference to the End Buyer. We will try to explain the difference between POP (Proof of Product) and POPC (Proof of Production Capability). The Seller / Producers ability to provide POP varies from commodity to commodity and from transaction to transaction.
Proof of Product is probably one of the most misunderstood parts of any commodity transaction.