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Freepoint Adds Cotton Business as Top Crop Traders Struggle
2017-09-19 04:01:00.4 GMT
By Alex Nussbaum
(Bloomberg) — Freepoint Commodities LLC is expanding into
cotton trading and eyeing growth in sugar, grains and other farm
products, as sliding prices help to upend the ranks of top
Freepoint has hired Crawford Tatum, formerly head of cotton
trading for Cocfo Agri Ltd., to lead a new office outside
Auburn, Alabama, Chief Executive Officer David Messer said in an
interview Monday. The Stamford, Connecticut-based merchant
house, which already trades coal, oil, metals and other
commodities, plans to add at least five more employees to the
office, Messer said.
“We’re looking for areas to grow our company and the
agricultural space fits a lot of the characteristics of what we
are already doing,” said the CEO, whose six-year-old firm now
has more than 400 employees worldwide, including more than 20 in
agriculture. “It’s a natural extension to our existing
The company is looking to expand even as bumper crops for
grains and other products have driven down prices, complicating
life for traders who depend on volatility to notch up big
profits. Last month, six grain traders leftLouis Dreyfus Co.
amid disputes over strategy. In February, Archer-Daniels-Midland
Co. announced a 41 percent drop in earnings, fueled by losses
from its global trading desk for wheat, soybeans and other
Unlike more established crop-trading houses, Freepoint
hasn’t invested heavily in physical assets and operations,
leaving it with less debt and more capital to devote to trading,
said Victor Osle, the company’s newly appointed global head of
agricultural products. That’s given the company an advantage in
recruiting traders, he said in the interview.
“Many of Freepoint’s peers are still feeling the impacts of
asset investments made at a different point in the cycle,” Osle
said. “Freepoint is unburdened by such legacy assets.”
Besides cotton, sugar and grains, the company also sees
opportunities to grow in oilseeds, feed ingredients and ocean
freight, said Osle, who’s based in London. He joined Freepoint
last year from Cofco, the Chinese state-owned trader.
Founded in 2011, Freepoint has grown as regulatory pressure
has pushed Wall Street banks away from commodities trading and
financial troubles beset rivals like Noble Group Ltd. and
Engelhart CTP. Messer last year added a retail energy sales
business, bulked up metals and energy trading in Asia, and
opened its first crop trading office in Kansas.
Messer and two fellow executives led Sempra Energy
Trading’s growth from a $50 million firm in the late 1990s to
$1.5 billion in annual revenue by 2005, according to Freepoint’s
website. The business was sold to the Royal Bank of Scotland in
2008. Messer and his partners founded Freepoint with backing
from private equity firm Stone Point Capital.
The cotton market is contending with ballooning global
supplies, fed by rising U.S. production and China’s plans to
sell off reserves. Sales of synthetic alternatives like
polyester are also on the rise. Messer nonetheless sees promise
for Freepoint, which will focus on North American markets.
Cotton futures traded in New York are up about 6 percent
from this year’s low in July, but almost flat from the end of
“We still see an important merchant role in the cotton
business in connecting growers with some of the mills, and also
potentially exporting cotton overseas,” he said.
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