Indiana Grain Company, LLC

Posted: 10/05/09

By: tomgrisafi

The cotton industry faces a “huge challenge” as traders close, leaving Louis Dreyfus & Cie. SA, Olam International Ltd., Noble Group Ltd. and Cargill Inc. controlling more than half of the fiber traded worldwide, said the incoming president of the International Cotton Association.

“This is the biggest challenge the cotton industry has faced in 40 years or so,” Cliff White, who becomes president in December and runs Olam’s U.S. cotton business, said in an interview yesterday in Liverpool, England. “There are fewer players in the merchant community.”

Paul Reinhart Inc. of Texas sought bankruptcy protection last year, the U.K.’s Weil Brothers & Stern Ltd. said it planned to close next year, and Memphis, Tennessee-based Dunavant Enterprises Inc. held merger talks with Allenberg Cotton Co., owned by Dreyfus. About 30 percent of the world’s traditional cotton buyers have shut or “significantly reduced” operations since last year, according to Adrian Moguel y Anza, chief executive officer of a commodities risk-management company owned by 50 farming groups in Brazil’s Center-West.

Cotton reached a 12-year high on March 5, 2008 before dropping 26 percent by March 20, triggering an investigation by the U.S. Commodity Futures Trading Commission.

Source: Reuters, Bloomberg