Brazil’s Cotton Farmers Form Geneva-Based Commodities Company

Brazil’s “big-scale” farmers in cotton, soybeans and corn are starting their own marketing and risk-management company to sell their production.

Libero Commodities SA, based in Geneva, is owned by about 50 farming groups in Brazil’s Center-West, covering more than 4 million hectares (9.88 million acres), Adrian Moguel y Anza, chief executive officer of Libero, said in an interview in Liverpool, England, today. The land represents about 50 percent of Brazil’s cotton production, 15 percent of soybeans and 5 percent of corn, he said.

“The key here is integration of big-scale agricultural supply,” Moguel y Anza, 40, said. “We don’t want to skip using other distribution systems. We just want to optimize our scale. Ultimately, we want to do this to reduce the risk.”

Cotton prices in New York reached a 12-year high on March 5, 2008, then dropped 26 percent by March 20, triggering an investigation by the U.S. Commodity Futures Trading Commission. An estimated 30 percent of the world’s traditional cotton buyers have left the business or “significantly reduced” operations since last year, Moquel y Anza said.

China Investment Corp., the nation’s sovereign wealth fund, last month said it bought a 15 percent stake in Noble Group Ltd. as the Hong Kong-based commodity supplier benefits from China’s demand for coal, iron ore and soybeans.

“What China is doing is integrating big-scale demand,” Moquel y Anza said. “We’re doing the exact opposite. We are big-scale supply looking to integrate.”

Moguel y Anza, who was head of Latin America for Louis Dreyfus & Cie.’s cotton division for three years until 2008, said Libero is completing an equity raising and will start operations by the start of 2010. He declined to say how much money is being raised or identify any of the farmers or investors. The company will have offices in Geneva and Sao Paulo, he said.