Federal Commission Accuses Kraft of Manipulating Wheat Prices

Federal Commission Accuses Kraft of Manipulating Wheat Prices

Photo Sasabune Omakase Modified: Flickr/erin/CC 4.0

The CFTC seeks financial penalties against Kraft and Mondelez.

This week, the Commodity Futures Trading Commission has filed a lawsuit against Kraft Foods Group and its former parent company, the multinational food company Mondelez, which manages brands like Cadbury, Triscuit, Chips Ahoy!, and Oreo.

“In response to high cash wheat prices in late Summer 2011, 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,” according to a press release from the CFTC.

“The CFTC Complaint alleges that Kraft and Mondelēz never intended to take delivery of this wheat and instead executed this strategy expecting that the market would react to their enormous long position by lowering cash wheat prices and strengthening the spread between December 2011 wheat and March 2012 wheat futures. Those price shifts did occur and, according to the CFTC Complaint, Kraft and Mondelēz earned over $5.4 million in profits.”

The CFTC is seeking a permanent injunction from future violations of federal commodities laws, disgorgement, and financial penalties. 

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