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UPDATE 1-Brazil's Gavilon dismisses executive, decides against wheat milling

Ana Mano

(Adds remark and updated wheat export data)

SAO PAULO, Feb 22 (Reuters) - Brazilian commodities trader Gavilon do Brasil, a subsidiary of Japan's Marubeni Corp , has dismissed a key manager in a strategic decision not to pursue wheat milling in the country, an executive told Reuters on Friday.

Gavilon is part of a growing group of nontraditional grains traders challenging industry heavyweights in Brazil by using "asset-light" models that forgo investing in capital-intensive assets like port facilities or processing plants.

The strategy has turned Gavilon into a top 10 soybean exporter in Brazil after only four years in operation. It also has become the country's leading wheat exporter with almost 50 percent of market share.

Renato Lofrano, the former head of the wheat division, was dismissed amid a dispute over venturing further into the milling segment, said General Manager Fabrício Mazaia of Gavilon do Brasil. The departure had not been previously announced.

"Gavilon intends to continue trading and distributing wheat but does not want to venture into wheat milling because it would end up competing with its own clients in Brazil," Mazaia said.

"The milling business is highly concentrated in Brazil and demands big investments," he added.

Gavilon will focus on other growth areas, mainly the soy business, he said.

Lofrano, who was vice president and commercial director of wheat at Gavilon, confirmed his departure this week after working at the company for five years.

The former executive denied he wanted to expand into wheat milling, saying he had wanted to expand a joint venture with a partner in southern Paraná state that owned a mill. The joint venture only focuses on wheat storage and origination and not milling, he said.

Mazaia said wheat constitutes a small part of Gavilon's business in Brazil, representing around 5 percent of volumes. Though not big in sales terms, he said wheat is key to Gavilon's diversification strategy.

The company expects to post "its best results ever" in fiscal 2018, which ends in March, Mazaia said.

He estimates in Brazil it traded 8.5 million tonnes of grain and oilseeds in that period, with soybeans representing 60 percent. Last August, Gavilon told Reuters it could become Brazil's top wheat exporter, accounting for up to 40 percent of total estimated exports of 1 million tonnes. Though overall wheat exports were smaller than forecast, Gavilon commanded a leadership with a 47 percent share, Mazaia said.

Gavilon do Brasil is an indirect subsidiary of U.S.-based Gavilon Agriculture Investment, which Marubeni purchased in 2013. (Reporting by Ana Mano; Editing by Steve Orlofsky and Jonathan Oatis)