Kraft Foods Group and Mondelez International have been charged with manipulating wheat futures and cash wheat prices.
The US Commodity Futures Trading Commission alleged the two companies bought US$90m of wheat futures in 2011 – an agreement in which the buyer agrees to pay the seller for a product at a predetermined future date and price.
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"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.
The actions allegedly earned them a profit of US$5.4m.
The CFTC is seeking a permanent injunction from future violations by the two firms as well as fines.
Aitan Goelman, the CFTC’s director of enforcement, said: "This case goes to the core of the CFTC’s mission: 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."
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By GlobalDataKraft and Mondelez were unavailable for comment at the time of writing.
