Like its peers, Glencore International PLC (GLEN.LN) suffered losses from the cotton market in 2011 as suppliers reneged on their Glencore contracts and the derivatives market became disjointed from the physical market, the company's chief executive said Monday.

Ivan Glasenberg told Dow Jones Newswires that the company has placed a Glencore grain trader to head up the new team, which should help improve the division's performance.

"There was this massive volatility in the cotton market," Glasenberg said, noting that cotton prices rallied from $0.80 a pound to up to $2.50/lb.

"Even if you hedged it out on the paper side of the business, you've got non-performance from a larger amount of these suppliers during this high price period. They did not deliver, they actually sold in to the market on a spot basis and did not perform on the existing contract. So naturally you take a hit there."

He said the cotton trading business was also new, having been put together from outside the company. "It is something that we don't normally do in Glencore. We try to grow the people from within," he said.

Glasenberg said the Glencore grain trader has been put as head of the cotton division to ensure that it runs under the Glencore model.

"Had a Glencore guy been running that business at that time, yes, I believe that we would not have been exactly at this position but it was the vagrancies of the market during that period which caused us to take that hit as did all other trading companies," he added.

-By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328; alex.macdonald@dowjones.com

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