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Offer and Counteroffer in Commodity Trading

A commodity deal is made step by step: a listing, an offer, often a counteroffer, and then an agreement. This guide shows how the steps work on Comdity.

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The offer

Anyone with a company account can answer a listing with an offer. The offer states the price and the terms. It can only use the terms that the listing allows: a sell offer allows FOB, and CFR and CIF if the seller marked them; a buy request allows CFR and CIF, and FOB if the buyer marked it. The other company is told by email and in the notifications, and the offer shows as awaiting reply.

Accept, decline or counter

The company that owns the listing can accept the offer, decline it or send a counteroffer. The company that made the offer can also withdraw it while it waits. An offer that is not answered in time expires.

What a counteroffer can change

A counteroffer can suggest a different price or other terms. A new term is not agreed just because it was proposed: the other company must accept it clearly. Until then the earlier terms stand. You can go back and forth until both sides accept the same terms, or one side declines or withdraws.

When a deal is agreed

A deal is agreed when one company accepts the last offer or counteroffer. The listing then shows as agreed. Both companies receive each other's contact details and finalise the sales contract directly with each other. Comdity is not a party to the sale.

Tips for negotiating

Change one thing at a time so that the other side can see what moved. Give reasons, for example a cheaper loading port or a different shipment month. Keep the offer date and validity in mind. Keep a record of what was agreed and write the final terms into the contract: see FOB vs CFR vs CIF and the export and import documents.

An example, step by step

A seller posts 25,000 tonnes of wheat, FOB, at a stated port. A buyer sends an offer for the full quantity with a lower price. The seller answers with a counteroffer: a slightly higher price and a shipment window two weeks earlier. The buyer accepts. The deal is agreed, and the two companies get each other's contact details to write the sales contract. If the buyer had wanted CFR instead, the seller would have to agree to that term first, and only if the listing allowed it.

What there is to negotiate

Price is only one part. Quantity and the allowed variation, the loading or discharge port, the shipment window, the payment terms, the inspection company and who pays for it, and the delivery term itself are all open until both sides accept them. A good counteroffer says which point it changes and why.

Validity and answering time

An offer is valid for a limited time. After that it expires, and a new offer is needed. Answer within the time shown, because the other company may be talking to other sellers or buyers at the same time. If you need more time, answer with a counteroffer that moves the shipment date.

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