Kraft, Mondelez to pay US$16 million in wheat price manipulation case

Kraft, Mondelez to pay US$16 million in wheat price manipulation case

The U.S. Commodity Futures Trading Commission (CFTC) said on Thursday Kraft Heinz Co and Mondelez International Inc will pay US$16 million in penalty regarding a wheat manipulation case that dates back to 2015.

FILE PHOTO: Bottles of salad dressing made by food conglomerate Kraft Heinz are seen on a supermark
FILE PHOTO: Bottles of salad dressing, made by food conglomerate Kraft Heinz, are seen on a supermarket shelf in Seattle, Washington, U.S., February 10, 2017. REUTERS/Chris Helgren/File Photo

REUTERS: The U.S. Commodity Futures Trading Commission (CFTC) said on Thursday Kraft Heinz Co and Mondelez International Inc will pay US$16 million in penalty regarding a wheat manipulation case that dates back to 2015.

Kraft Heinz, which was Kraft Foods until 2015, and Mondelez bought US$90 million of December 2011 wheat futures, which gave the companies a dominant position in the market, even though they never intended to take possession of the grain CFTC said.

The move sent a false signal that the companies had demand for wheat and caused an artificial price that earned them more than US$5 million in profits, CFTC said.

Both Kraft and Mondelez did not immediately comment.

The trade commission said the companies' goal was to narrow the price spread between the December 2011 and deferred-month wheat futures contracts, causing the market to sell cash wheat to the companies at lower prices, while earning them a profit on their speculative futures positions.

Wheat futures and options traders had also accused the companies of illegally manipulating the grain's price at their expense.

The penalty is about three times the companies' alleged gain, the CFTC said in a statement.

(Reporting by Nivedita Balu in Bengaluru; Editing by Arun Koyyur)

Source: Reuters

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