It's not just trade finance costs. Trade itself is stopping because of the inability to make large cross-border payments.

India Times: Commodity traders hit by arrest of interbank lending (27 October, 2008)

The credit crisis has begun to take a toll on the real economy, slowly but surely. Among the sectors feeling the pinch, is commodities, though traders are not openly expressing their angst.

A large south-based trader of edible oils has been unable to procure de-gummed soybean oil from a South American exporter, whose bank refused to discount the latter's bill owing to shortage of dollars.

"Our banker, State Bank of India, issued a letter of credit (LC) to the exporter's bank in South America, but the bank refused to negotiate the LC and pay the exporter. We will now have to negotiate with another banker to get the consignment totalling 1.5 million tonne of de-gummed soybean oil," said a company source.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith