Kraft, Mondelez call for dismissal of wheat price case
Kraft, Mondelez urge court to dismiss wheat price manipulation case
A case was filed against the companies by the US Commodity Futures Trading Commission in April. The CFTC alleged the two companies bought US$90m of wheat futures in 2011 in order to manipulate the price of the commodity.
"Kraft and Mondelez 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," the CFTC said in a statement.
Kraft spun off its snacks business into Mondelez in 2012. The CFTC’s complaint focused primarily on trading that occurred before the split.
In a court filing yesterday (1 June), the companies said Kraft's actions aimed to maintain a steady wheat supply in the face of a "dysfunctional" wheat market. The company’s decisions in 2011 "tell a straightforward story of a snack-food company doing the best it could to purchase wheat at sound prices in a difficult market," they said.
They called on the US District Court for the Northern District of Illinois to dismiss the case, arguing the CFTC's allegation wheat prices changed as a result of Kraft's transactions did not infer it deceived or manipulated the market.
A spokesperson for Mondelez said: "We filed a motion to dismiss yesterday. We're not providing any further comment as the motion and brief speak for themselves."
Meanwhile, a spokesperson for Kraft distanced the group from the litigation and stressed the case is not expected to have a "material" financial impact on Kraft.
"While Kraft is named in the CFTC litigation, the litigation is related to wheat trading that occurred before Kraft's spin-off from Mondelez International. In addition, the trading involved wheat for use in the snack businesses that are now part of Mondelez or its affiliates. Therefore, as part of our separation agreement, Mondelez will predominantly bear the costs of the litigation," the spokesperson told just-food today.
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