Broker collapse costs ND state mill

BISMARCK, N.D. (AP) — North Dakota's state-owned flour mill will likely lose at least $60,000 because of the collapse of a commodities broker the mill has used to guarantee prices for the wheat it buys, according to a state audit.

The Mill and Elevator was a longtime client of MF Global Holdings Ltd., a New York-based company that filed for bankruptcy last October. Vance Taylor, the mill's general manager, said Tuesday that the mill had $408,000 in its MF Global account when the company collapsed.

"We've been working with them for years. They're one of the largest brokerage firms and one of the most respected at the time," Taylor said. "Obviously, they're not now."

About $292,000 has been recovered, said Ed Barchenger, the mill's comptroller. The audit estimates the mill will eventually get back $346,800, which would leave a loss of $61,000. The recovery is not assured.

Investigators say MF Global was using clients' money for its own operations and that more than $1.2 billion went missing. Auditors and a bankruptcy trustee are sorting through the company's finances.

The company's problems have been the subject of congressional hearings. MF Global's chief executive officer was Jon Corzine, a former New Jersey Democratic governor, U.S. senator and chief executive of Goldman Sachs, an investment banking firm.

Taylor said the mill used MF Global and another brokerage, ADM Investor Services Inc., of Chicago, to buy wheat futures as part of its operations, primarily on the Minneapolis Grain Exchange.

The exchange is one of the primary markets for hard red spring wheat. North Dakota is a leading producer of the wheat variety, which the mill buys to grind into bakery flour.

The loss will put a small dent in the mill's finances. It made $2.2 million in profits during October, November and December, according to its most recent financial results.

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