US food giant Kraft Foods and Cadbury owner Mondelez have been charged with “abusive” rigging of wheat markets to drive down prices.
The US Commodity Futures Trading Commission has charged the pair — now separate, but previously one business — with “manipulative trading strategies” to lower wheat prices, racking up profits of more than $5.4 million (£3.6 million) in the process.
The CFTC says the two companies faced high wheat prices starting in the summer of 2011 and launched a plan to buy up $90 million of wheat futures for delivery in December of that year, a huge order which amounted to a six-month supply.
The CFTC says they never intended to take delivery of the wheat, but expected the market would react to their large holding by driving down future wheat prices.
CFTC enforcement director Aitan Goelman said: “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.”
Kraft said the case would not have a significant impact on its financial position.
Mondelez expects “to predominantly bear any monetary penalties or other payments that the CFTC may impose”.
