NEW YORK, June 7 (Reuters) - Commodities broker and

analyst StoneX Group Inc has expanded into the physical

trading of commodities by adding a coffee business to its cotton

trading operation, according to sources and official documents.

StoneX acquired the specialty coffee business in the United

States from Mercon Coffee Corporation, the troubled coffee

trader that filed for bankruptcy protection last year, according

to documents in court proceedings in New York.

The acquisition includes the plant, equipment, inventories

and the books of Mercon Specialty, a business that consists of

sourcing fine coffees in producing countries and transporting

the beans to the United States, where they are sold to local

roasters.

It is the second major move by StoneX on the physical

trading of commodities. The company acquired late in 2022 the

cotton merchant CDI-Societe Cotonniere De Distribution S.A,

based in Lausanne and with an office in Brazil.

StoneX main business continues to be market intelligence and

price risk services, such as executing hedging strategies for

traders, producers and processors of commodities around the

world. The company did not return a request for comment

regarding its expansion into physical trading.

Mercon Specialty's website is already redirecting visitors

to the new website of StoneX Specialty Coffee.

A coffee trader working with a multinational group, who

asked not to be named because he was not authorized to discuss

the issue publicly, said the move by StoneX raised concerns

among other traders who used to hedge positions with the

company.

According to him, Neumann Kaffee Gruppe (NKG), one of the

world's largest coffee traders, decided to close its accounts

with StoneX following the deal in the specialty coffee sector in

the U.S., where Neumann has a large operation.

"There is a clear conflict of interests between StoneX and

its existing clients in the price risk services," he said.

Neumann said it will not comment on the issue at this time.