* COFCO taps Morgan Stanley to work on sale plan - sources
* Possible sale comes only months after COFCO took full ownership
* Nidera hit by losses, accounting irregularities in Brazil
HONG KONG, Aug 23 (Reuters) - After paying hundreds of millions of dollars for Dutch-based grains trader Nidera in a three-year takeover completed just months ago, Chinese state-owned food group COFCO is considering selling the troubled business, according to people familiar with its plans.
Aiming to become a stronger global player, COFCO had hoped to combine Nidera with Noble Agri, a unit of Singapore-listed trading house Noble Group, which it also began buying in 2014.
Any sale would mark an abrupt change in strategy, as COFCO looks to restructure its business as part of wide-ranging reforms of China's state-owned companies.
Two sources say COFCO has tapped investment bank Morgan Stanley to work on plans to sell.
Unforeseen losses racked up by Nidera, and accounting irregularities unearthed last year in its Latin American operations have helped persuade COFCO's management to look at ways to divest.
"Nidera's continued losses have been worse than COFCO's expectation," said one of the sources. "And the accounting issue in Nidera's Brazil business helped accelerate the sale."
It is unclear how much the business would be valued at, as the process is at an early stage, said one source. While another said COFCO could opt for either an outright or partial sale, and it is unknown whether COFCO would sell the physical assets that helped build a global grains supply chain.
The sources declined to be named as COFCO has not made public that it is considering selling Nidera.
Neither COFCO or Morgan Stanley offered any immediate response to Reuters' requests for comment. COFCO International, the unit now running Nidera, did not immediately respond to requests for comment either.
JOINING THE GIANTS COFCO's buying binge over the past few years had established the firm as a significant rival to the so-called "ABCD" quartet of global agricultural trading giants - Archer Daniels Midland , Bunge, Cargill and Louis Dreyfus Company.
But the expense and trouble incurred integrating Nidera and Noble Agri sapped COFCO's ability and appetite for any subsequent deals.
The prices paid by the Chinese grains-to-real estate conglomerate for stakes in the two companies had raised analysts' eyebrows, along with doubts about the challenge of integrating firms with very different cultures.
COFCO's then chairman Ning Gaoning spoke of ambitions of listing the combined entity - but he left last year to head another state-owned company, Sinochem.
COFCO paid around $1.5 billion for a 51 percent stake in Noble Agri in 2014 and then another $750 million for the remaining shares in December 2015.
In February, COFCO became the sole owner of Nidera, having gradually raised its stake since 2014. Financial details have not been disclosed, but analysts estimate that COFCO paid hundreds of millions of dollars for Nidera.
In April, COFCO combined the two businesses under a newly established division, COFCO International.
But the problems at Nidera were already all too apparent.
Nidera Capital BV - the holding company owned by COFCO - posted a full-year loss of $266.6 million in 2016 versus a loss of $65.9 million in the 15 months ended in December 2015.
COFCO unearthed a $150 million hole in the accounts of Nidera's Latin American operations last year, caused by accounting irregularities and rogue trading in biofuels, which led to an overhaul of its business in Brazil.
(Reporting by Kane Wu and Julie Zhu in Hong Kong; Additional reporting by Anshuman Daga and Gavin Maguire in Singapore; Editing by Simon Cameron-Moore)