Kraft, Mondelez Charged with Manipulating Wheat Prices
Published at
Photo by Tim Boyle/Getty Images(WASHINGTON) — The U.S. Commodity Futures Trading Commission on Wednesday charged Kraft Foods Group and Mondelez Global LLC with manipulating wheat futures and cash wheat prices.
According to a press release, the two companies are additionally accused of violating speculative position limits and engaging in numerous noncompetitive trades of wheat. “This case goes to the core of the CFTC’s mission,” CFTC Director of Enforcement Aitan Goelman said, “protecting market participants and the public from manipulation and abusive practices that undermine the integrity of the derivatives markets.”
“A market participant who is not happy with cash prices available to it may not resort to manipulative trading strategies in an attempt to artificially lower that price,” Goelman added.
According to CFTC allegations, Kraft and Mondelez “developed, approved and executed in early December 2011 a strategy to buy 90 million of December 2011 wheat futures, which amounted to a six-month supply of wheat.” The commission says that the companies never intended to accept delivery of that amount of wheat, and instead hoped that the market would react to the move by lowering cash wheat prices. “Those price shifts did occur,” the CFTC notes, adding that “Kraft and Mondelez earned over $5.4 million in profits.”
Follow @ABCNewsRadio
Copyright © 2015, ABC Radio. All rights reserved.