Kraft and Mondelēz Sued for Wheat Price Manipulation
Kraft Foods was accused by the US Commodity Futures Trading Commission of manipulating wheat prices by hoarding futures contracts it didn’t intend to fulfil.
A unit of Mondelēz International was also named in the suit by the CFTC. That company is the snack food maker formerly known as Kraft Foods Inc., which changed its name as it spun off its groceries unit as Kraft Foods Group in 2012.
Kraft, which last month announced plans to merge with Heinz, and Mondelēz Global LLC tried to illegally influence December 2011 wheat futures prices on CME Group’s Chicago Board of Trade, according to the regulator’s complaint filed Wednesday in Chicago federal court.
In an e-mailed statement, Northfield, Illinois-based Kraft said the alleged wrongful conduct occurred before its spinoff from Mondelēz and that the latter company would bear the brunt of any penalties exacted by the CFTC.
“We do not expect this matter to have a financially material impact on Kraft,” Basil Maglaris, a company spokesman, said.
Mondelēz declined to comment on the court filing.
Mondelēz and Kraft allegedly bought $90 million of the December 2011 contracts -- tantamount to a six-month supply -- never intending to take delivery, according the CFTC. Their intent was to compel the market to lower cash wheat prices in response to the companies’ long position.
When those price shifts occurred, Mondelēz and Kraft earned more than $5.4 million in profits and savings, according to the agency.
Bloomberg News, edited by ESM