American agriculture giant Cargill started a cross-continental wheat trade transaction worth USD 12 million on a blockchain platform through a team effort with companies from Singapore and the Netherlands. The transaction was used, among other things, in an effort to show how commodity traders can use blockchain technology to keep their businesses up and running even in disrupting events such as a pandemic.
The technology also accelerates the shipping process, as the transaction took five days to settle, whereas conventional wheat trading methods can take up to a month. The platform they used has already been up and running since 2018, and has executed more than USD 2.2 billion worth of live trade finance transactions in this time period.
According to the event’s press release, one of the biggest use cases for blockchain is cross-border commodity trading, as the technology enables real-time monitoring by multiple parties, eliminates any data ownership concerns, and simplifies the exchange of documents.
Blockchain’s inherent immutability and transparency dispenses with concerns regarding information accessibility, while its decentralized nature ensures that the number of third parties involved in the trade is minimized, which also decreases related costs. “Consensus-driven smart contracts in this deal minimized our time spent on processing documents by more than half. Riding on the success of this test-case, [we are] excited to advance the USD 10 trillion trade-finance industry,” said the key facilitators of Rabobank, one of the trade’s partners.
