Commodity broker takes full advantage of China's VP visit

Captures portion of $6.7 billion in Chinese hedging business

Shanghai Futures

INTL FCStone opened its fourth Asia-Pacific office in Shanghai last year, trading physical metals as well as agricultural futures on the Dalian Commodity Exchange. The company may also get access to the Shanghai Futures Exchange this year, Nessler said. The bourse is the nation’s second- largest after Zhengzhou, China Futures Association data show.

The firm, which traces its origins to an egg-selling venture founded in Chicago in 1924, is expanding at a time when Zurich-based Credit Suisse Group AG, Switzerland’s second- largest bank, and Natixis SA, the investment-banking and asset- management unit of Paris-based Groupe BPCE, plan to cut their commodity businesses.

Archer Daniels Midland Co., the world’s largest grain processor, said Feb. 21 it would cut 1,200 jobs as the Decatur, Illinois-based company reduces costs. Cargill Inc., a Minneapolis-based grain trader and the largest closely held U.S. company, said in December it would eliminate 2,000 positions.

West Des Moines

Nessler, based in West Des Moines for three decades, became president of FCStone LLC in October 2010 and oversaw four acquisitions since then. MF Global’s LME unit, comprising 55 people, was bought for an undisclosed amount and came with a seat on the trading floor of the world’s biggest metals bourse, alongside JPMorgan Chase & Co., Barclays Plc and nine others.

INTL FCStone posted a loss of $2.4 million on a marked-to- market basis in the three months ended Dec. 31, the first quarterly loss since 2008. The company prefers that measure rather than generally accepted accounting principles partly because it reflects changes in the value of commitments to future commodity transactions. Its shares fell 6.1 percent this year and were little changed in 2011.

The company has more than 20,000 clients across 100 countries, and trades solely on their behalf, said Nessler. The number of customers has doubled in two years as the workforce rose 70 percent to more than 1,000, he said. INTL FCStone may add rubber trading if it can find the right team, Nessler said.

‘Millions and Millions’

Among his first clients was Brad Davis, chief executive officer of Gold-Eagle Cooperative, a firm based in Goldfield, Iowa, that trades as much as 40 million bushels of corn and soybeans a year and operates an ethanol plant with annual output of 60 million gallons.

“You always know where he stands,” said Davis. “Trust is very important in this business. Millions and millions of dollars of business that’s conducted verbally, at least initially, so you need to have tremendous trust in the individuals and the company you are doing your business with.”

Nessler also oversaw the acquisition of Hencorp Becstone Futures LC, London-based Ambrian Commodities Ltd., and CoffeeNetwork, a news and analysis website. INTL FCStone said in December that it was in negotiations to buy London-based TRX Futures Ltd. About 65 percent of the group’s revenue comes from commodities. Other areas include foreign exchange and equities.

The Midwesterner’s parents were from Yugoslavia and Romania and came to live in Chicago during World War II. He gained a degree in agricultural industries from the University of Illinois before trading soybeans at AGRI Industries in West Des Moines. He also has a 250-acre non-commercial farm growing corn and soybeans.

“Agriculture back then wasn’t a very sexy world to get into,” Nessler said. “I am lucky enough to have the foresight to realize that at the end of the day, there’s a certain thing that people couldn’t live without, and that’s food.”

Bloomberg News

--With assistance from Jeff Wilson and Whitney McFerron in Chicago, Debarati Roy in New York, and Feiwen Rong in Beijing. Editors: Philip Revzin, James Poole

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