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EXCLUSIVE-Tancredi returns to Allenberg as CEO, replaces Nicosia

* Tancredi returns to Allenberg as CEO six weeks after split

* Nicosia expected to remain with company

NEW YORK, Oct 26 (Reuters) - Anthony Tancredi will replace Joe Nicosia as chief executive of Allenberg Cotton, returning to the world's largest cotton merchant just six weeks after his shock departure, a source familiar with the situation said.

Nicosia will step down as head of the business he has run for nearly three decades, making way for Tancredi, who will take over the day-to-day running of the company, the source said. Allenberg is owned by Louis Dreyfus Corp, one of the world's largest agricultural merchants.

Nicosia is expected to continue working at the company he has built from a modest domestic merchant into a global trading powerhouse, but it is still not clear what his precise role will be. He currently runs the hedging desk.

``He's still going to be involved,'' said the source.

An official at Allenberg's Cordova, Tennessee, headquarters declined to comment.

Tancredi will return to Allenberg on Nov. 5, almost two months after his abrupt exit in September that took customers and traders by surprise. He had been president.

Nicosia has long been the dynamic public face of Allenberg, which was founded in 1921 just outside Memphis, the epicenter of U.S. cotton trading. It has almost 300 employees.

But Tancredi, long considered Nicosia's heir apparent, was key to the companys purchase of its closest domestic rival, Memphis cotton legend Dunavant Enterprises, in 2009 after that firm fell victim to the previous round of whipsaw market volatility, market participants said.

He joined Louis Dreyfus in 1985, five years after Nicosia, who had been working in the firm's grain division. This was about the same time that Dreyfus teamed up with Allenberg, according to company websites.

(Editing by Bob Burgdorfer)