The merchant model lesson said physical trading is capital intensive, but in a particular way: the money is tied up in commodities in transit and in storage, not in factories. This lesson is about how that money is found and what it costs, because financing is not a back-office detail in commodity trading, it is the thing that makes the business possible. A single cargo can cost a hundred million dollars that must be paid at loading and is not recovered until the buyer pays weeks later, and no trading house has that much cash for every cargo, so it borrows. We cover the instruments that solve the trust problem between distant strangers (the letter of credit above all), the facilities that fund inventory and flow, the margin that hedging itself demands, and how the cost of all this money is the financing term that has appeared in every worked example in the module. We build the core idea on a plain escrow example, then map it to a real cargo, and we work the financing cost of a trade by hand.
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