Anthony Tancredi, president of Allenberg Cotton, has left the world's largest cotton merchant after 27 years, an unexpected departure that traders said indicated last year's market turmoil is still reverberating through the industry. Tancredi, who was second in command to Allenberg Chief Executive Joe Nicosia and responsible for global merchandising, left about a week ago, according to two sources who have spoken to senior company employees. Allenberg is owned by Louis Dreyfus Corp, one of the world's largest agricultural merchants.
Few other details are known about the exit of the veteran trader, widely credited with helping transform the Cordova, Tennessee-based Allenberg from a modest domestic merchant into a global powerhouse that claims to handle about a fifth of US production each year. But his departure surprised many. The firm had appeared insulated from much of the turmoil that has upended the market since last year, as an unprecedented wave of defaults shredded trust among traders, caused hundreds of millions of dollars in losses and triggered a series of high-profile personnel changes.
"This has been a mystery. You see that happen and you wonder whats going on in the company," said one market source, who had confirmed the news with Allenberg officials as word spread through the market late last week. Louis Dreyfus spokespeople in Switzerland and Allenberg declined to comment. Tancredi did not return calls to his home or office numbers seeking comment.
The news was all the more surprising as Tancredi was viewed as heir apparent to Nicosia, traders said. He joined Louis Dreyfus in 1985, five years after Nicosia, who had been working in the firm's grain division. This was about the same time that Dreyfus teamed up with Allenberg, according to company websites.
Brokers who know him say he is less intense than Nicosia. The latter has been the more dynamic public face of Allenberg, which was founded in 1921 just outside Memphis, the epicenter of US cotton trading. It has almost 300 employees. Tancredi was key to the company's purchase of its closest domestic rival, Memphis cotton legend Dunavant Enterprises, in 2009 after that firm fell victim to the previous round of whipsaw market volatility, market participants said.
The departure comes amid one of the cotton market's most tumultuous periods, as companies count the consequences of last year's unprecedented price surge, subsequent collapse, widespread contract defaults and huge trading losses. It is also a critical time for Allenberg and Nicosia as they prepare to face a lawsuit levelled by former Glencore trader Mark Allen, who is accusing Dreyfus, Allenberg and its chief executive of manipulating IntercontinentalExchange cotton futures prices last July.
Allen was among several high-profile personnel changes to follow the upheaval, having left Glencore last November as the company reported a loss of more than $300 million in the cotton market. He has set up his own trading firm, Compass Cotton. Few merchants have emerged unscathed. Noble Group blamed its first loss in more than a decade last November partly on cotton defaults. Olam, based in Singapore, reported a 14 percent fall in fourth-quarter net profit last month, which analysts attributed mainly to ructions in the cotton market.
"It's a sign of the times as firms lose money and people," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana. In August, Cliff White left his job running the North American cotton operations of commodities merchant Olam, which expanded into cotton through acquisition and is ranked behind the big three - Allenberg, Cargill and Noble. He joined Texas-based merchant Omnicotton as vice president to drive its expansion into Australia.
White, who had been at Australia's Queensland Cotton when it was bought by Olam in 2007, said in an interview that his decision to leave Olam was not linked with the roiling in the markets, but rather the opportunity to grow Omnicotton beyond its main markets of the United States, Brazil and Argentina. With the major merchants recoiling after last years losses, it is a rare example of a cotton firm under expansion. The impact on Louis Dreyfus is not known because it does not release its financial results as a private company.
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