The Commodity Trade Document Checklist

Physical commodity trade runs on documents. Each stage of a deal produces its own paper, in a sequence that has hardened into market practice over the last thirty years. Skip a step and the counterparty's bank refuses to move; get the sequence wrong and the intermediary chain loses commission protection. This is the full checklist, in order, with what each document proves and links to editable templates.

Stage 1 - Prospecting and non-disclosure

1. LOI (Letter of Intent) - buyer's early expression of interest, non-binding. States product, approximate volume, target price basis and preferred Incoterm.
2. SCO (Soft Corporate Offer) - seller's indicative response, non-binding. Confirms product family, typical availability and approximate price. See FCO vs SCO.
3. NCNDA - Non-Circumvention Non-Disclosure Agreement signed by all parties in the intermediary chain. Protects introducers from being cut out of the deal.
4. IMFPA - Irrevocable Master Fee Protection Agreement. Locks in the commission split among intermediaries before any commercial number is exchanged.

Stage 2 - Firm offer and acceptance

5. ICPO (Irrevocable Corporate Purchase Order) - buyer's firm order, signed and on letterhead. Matches the SCO terms and often includes bank endorsement.
6. FCO (Full Corporate Offer) - seller's firm offer with validity window, exact spec, price, Incoterm, payment terms and delivery schedule.
7. SPA (Sales Purchase Agreement) - the contract itself. Turns the accepted FCO into a full legal agreement with detailed clauses on quality, delivery, payment, force majeure, sanctions and dispute resolution.

Stage 3 - Financial capacity

8. POF (Proof of Funds) - bank statement or account confirmation showing buyer has liquidity for the deal. Adequate for smaller transactions.
9. RWA (Ready Willing Able) letter - stronger bank confirmation of both funds and intent to complete. Required for larger transactions and confirmed LCs.
10. Bank Comfort Letter - some jurisdictions use this as an intermediate step between POF and RWA.

Stage 4 - LC issuance

11. LC application - buyer's instructions to its bank to open a documentary credit.
12. MT700 - SWIFT message that carries the LC to the advising or confirming bank in the seller's country.
13. LC confirmation - if requested, the confirming bank adds its own undertaking.

Stage 5 - Shipment and presentation

14. Commercial invoice - signed, matching Field 45A description of goods.
15. Bill of lading (on-board) - full set, clean, dated on-board notation.
16. Packing list - consistent with invoice totals.
17. Certificate of origin - chamber-attested or legalised as required by Field 46A.
18. Insurance certificate - only for CIF/CIP rules; minimum 110 percent of CIF value.
19. Quality / inspection certificate - SGS, Bureau Veritas or as named.
20. Regulatory certificates - EUR.1 for preferential origin, phytosanitary for plant products, EUDR due-diligence statement for in-scope commodities, CBAM embedded-emissions report, and so on.

Red flags in the sequence

• A seller demanding an ICPO before signing an NCNDA - the intermediary chain loses protection.
• A buyer offering an SBLC upfront instead of an LC - often a fraud vector; see the blog post on trade-finance red flags.
• Bank instruments from unknown issuers in high-risk jurisdictions - verify the bank is actually a licensed institution and not a shell.
• Prices dramatically below the Platts or LME benchmark - the deal is either subsidised or a scam.

Templates for every step

Editable Word and PDF templates for LOI, SCO, NCNDA, IMFPA, ICPO, FCO, SPA, POF, RWA and more are on the Templates hub. For the LC-specific document checks, the LC Documents Checklist tool runs each presentation document against ISBP 821 and the specific LC terms.