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UPDATE 2-ED&F Man reviews physical grains trading, may exit business

* Company entered physical grains trading in 2015

Sugar refinery in Israel be shut at the end of 2017 (Adds company comment)

By Jonathan Saul, Nigel Hunt and Chris Prentice

LONDON/NEW YORK, Dec 8 (Reuters) - ED&F Man said on Friday it is reviewing its physical grains trading operations after a challenging year and may partially or entirely exit the business.

The company said it would not be taking new positions in physical grains during the review, which is the latest leg of restructuring at the more than 230-year-old commodities firm, which last month saw the ouster of its chief executive officer and managing director of its commodities division.

ED&F Man said in October it will be restructuring its core sugar business, as it struggled to cope with surplus stocks depressing prices.

The company also said on Friday the EU's resumption of unrestricted sugar exports, after many years in which they had been limited by quotas, meant its sugar refinery in Kiryat Gat, Israel was not viable and would shut down at the end of 2017.

ED&F Man entered the physical grains trading market as a niche player in July 2015 and employs around 40 people in a number of locations including Russia, the Ukraine, China and Switzerland.

The move could lead to a quick exit from a grains market that has punished larger, more longstanding grains traders such as Bunge Ltd , Louis Dreyfus Commodities BV and Archer Daniels Midland Co.

ED&F Man Capital Markets, the group's financial brokerage and derivatives trading division, which acts as a broker of grain futures and options, is not affected by the review.

In late October Man said CEO Phil Howell would leave as part of a senior management reshuffle after what it described as "a very challenging year."

This followed an earlier announcement in October that the managing director of its commodities division, Jan Kees van der Wild, had decided to step down.

The company's wider portfolio includes businesses involved in trading coffee, molasses and animal feeds, pulses, shipping and capital markets as well as sugar and grains. (Additional reporting by Michael Hogan; Editing by Veronica Brown and David Evans)