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Cargill Wins Arbitration Case Filed by Alabama Cotton Coop

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Feb. 6 (Bloomberg) -- Cargill Inc., one of the world’s biggest cotton traders, didn’t breach a contract when it sold the commodity on behalf of an Alabama cooperative in 2011 and 2012, Memphis Cotton Exchange arbitrators ruled.

The arbitration committee denied a $27 million claim from the Autauga Quality Cotton Association, which alleged Cargill failed to fulfill its obligations under a December 2010 contract.

The arbitrators found that Minneapolis-based Cargill marketed the cooperative’s cotton as best it could with the information it had at the time, according to a copy of the ruling on the cooperative’s website.

Cargill didn’t leave Autauga’s cotton “unprotected or unhedged” as cotton prices fluctuated wildly, and at the time believed it was “acting in the best interest of” its client, according to the decision.

Most-active cotton futures in New York rose to a record on March 7, 2011, on speculation global supplies may not satisfy demand in China and from then tumbled 57 percent as demand fell.

The Prattville, Alabama-based cooperative initially sought $35 million, but reduced its claim after reviewing futures account statements from Cargill, Autauga manager Jeff Thompson said in an e-mail today.

“We are sadly disappointed and vehemently disagree with their decision,” he said in a statement on the group’s website. The cooperative’s board will determine the future course of action in the next few weeks, he said by phone.

“We are pleased to have the arbitration completed and are fully focused on our ongoing work with cotton suppliers and customers around the world,” Mark Klein, a spokesman for Cargill, said in an e-mail today. “The arbitrators found that Cargill did not act arbitrarily or engage in any conduct for which it could or should be held accountable.”

A voicemail left for Bobby Walton, the dispute resolution officer of the Memphis Cotton Exchange, to confirm the decision was not immediately returned.

To contact the reporter on this story: Shruti Date Singh in Chicago at ssingh28@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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