Cargill Makes Ex-Jefferies Hire to Start Metals Trading

Cargill Inc., the biggest closely held company in the U.S., hired the former head of metals trading at Jefferies Group LLC to begin buying and selling industrial-metal derivatives on behalf of risk-management clients.

Michael Frawley, who also previously worked at Newedge Group SA, is joining as managing director of global metals, said Anna Lovely, a Cargill spokeswoman. Minneapolis-based Cargill said yesterday in a separate statement it plans to apply for broker and clearing-house membership on the London Metal Exchange.

“Given the increasing market volatility in metals, we believe there is substantial opportunity to provide companies with risk-management tools to stabilize pricing and ultimately expand or defend market share,” Mike LeSage, who heads Cargill’s risk-management unit, said in the statement.

Nickel had the most price swings among metals this year and ranks eighth among the 22 raw materials tracked by the Bloomberg Commodity Index. Prices surged as much as 56 percent to a peak in May and then fell into a bear market last month. Copper has been more stable and only gold had a lower volatility among the commodities tracked by the index.

Cargill said it will apply for category 2 membership of the LME, the biggest bourse for industrial metals. Barclays Plc, Credit Suisse Group AG and Goldman Sachs Group Inc. are among other companies with category 2 membership, which allows them to issue LME futures contracts but not to trade on floor of the exchange.

Coal Exit

Cargill is currently a category 5 member, meaning it has no trading rights on the LME except as a client.

While Cargill is getting into metals, it said in March it was stopping trading in European power and natural gas and global coal markets after oversupply and slowing demand dragged down prices.

In February, the company replaced a senior North American energy trader while industry publication reported it lost at least $100 million in U.S. energy trading. Cargill disputed some details of the report.

Cargill employed 140,000 people as of May last year, according to data compiled by Bloomberg. It gets most of its revenue from the production and trading of agricultural commodities, including grains and meat.

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