CFTC Orders Kraft, Mondelez to Pay $16M For Wheat Price Manipulation
The U.S. Commodity Futures Trade Commission (CFTC) has ordered Kraft Heinz and Mondelez to pay $16 million in penalties in connection to charges of manipulating the wheat market in a scheme that gained the companies $5 million.
In December 2011, the two companies bought $90 million in wheat futures - a move that positioned the two companies as dominant in the market, despite their intention to never take possession of the wheat.
This in turn signaled the market of false high demand which caused a price shift resulting in $5 million in profits to the companies, according to the CFTC, which explained that Kraft and Mondelez intended to narrow the price spread between December 2011 and deferred-month wheat futures, enabling them to buy wheat at lower prices.
Both companies strongly disagree with the CFTC’s conclusions, and say they will be petitioning for immediate relief from the court.