* 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 (Recasts with plans to sale seeds business in Latin America)
By Kane Wu and Julie Zhu
HONG KONG, Aug 23 (Reuters) - Chinese state-owned food group COFCO, which fully acquired Dutch-based grains trader Nidera in February after a three-year takeover, is considering a sale of Nidera's Latin American seeds business, according to people familiar with its plans.
Investment bank Morgan Stanley is advising COFCO on the sale, the sources said. They declined to be named as they were not authorised to speak to the media.
The sources did not provide a value for the business, and said the process was at an early stage. One of the sources said other parts of the Nidera business could also be put on the block, but provided no specifics.
With ambitions to become a stronger global player, COFCO in April combined Nidera with Noble Agri, a former unit of Singapore-listed trading house Noble Group, which it also began buying in 2014 and fully took over in December 2015, into a new entity COFCO International.
COFCO is also looking to streamline its business, as part of wide-ranging reforms of China's state-owned companies that have seen many shed less profitable units.
Kevin Yang, head of COFCO International's CEO Office and corporate affairs, said the company had no intention to sell the entire Nidera operation, but did not comment on the possible sale of Nidera's Latin American seeds business.
"COFCO International continues to work hard towards the full integration of the former Nidera and COFCO Agri businesses to deliver our vision to be a leading agribusiness, leveraging our strong presence in China, and our shareholders are fully committed to this process," Yang said.
COFCO did not respond to Reuters requests for comment. Morgan Stanley declined to comment.
Unforeseen losses racked up by Nidera, and accounting troubles unearthed last year in its Latin American operations have helped persuade COFCO's management to look at ways to divest parts of the business, the sources said.
COFCO unearthed a $150 million hole in the accounts of Nidera's Latin American operations last year, caused by accounting irregularities, which led to an overhaul of its business in Brazil.
"Nidera's continued losses have been worse than COFCO's expectations," said one of the sources. "And the accounting issue in Nidera's Brazil business helped accelerate the sale."
Nidera's seeds arm produces and markets a range of agricultural seeds, including corn, sunflower, soybeans and wheat. Most of its operations are concentrated in South America and Europe. Its main markets in Latin America are Argentina and Brazil.
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.
COFCO's former 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.
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. (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)