Commodity finance refers to financial services and products specifically designed to support the production, trading, and distribution of commodities. Commodities are raw materials or primary products that are widely traded in the global market, such as metals, energy resources, agricultural products, and other natural resources.
Commodity finance serves as a crucial link in the supply chain, providing financing solutions to various participants involved in the commodity industry, including producers, traders, processors, and end-users.
The main purpose of commodity finance is to facilitate the movement and monetization of physical commodities throughout the supply chain.
This type of financing provides working capital to commodity producers to fund the production and preparation of goods before they are shipped. It covers expenses like procurement, processing, and storage of commodities until they are ready for export or distribution.