Kraft accused of manipulating wheat price

The US Commodity Futures Trading Commission (CFTC) has accused Kraft Foods and Mondelēz Global of manipulating the prices of cash wheat and wheat futures.

According to the CFTC, in response to high cash wheat prices in late Summer 2011, Kraft and Mondelēz developed and executed a strategy to buy $90 million of December 2011 wheat futures, which amounted to a six-month supply of wheat.

The US regulator alleges that Kraft and Mondelēz never intended to take delivery of this wheat and instead waited for the market to react by lowering cash wheat prices and strengthening the spread between December 2011 wheat and March 2012 wheat futures.

Those price shifts did occur and, according to the CFTC, Kraft and Mondelēz earned over $5.4 million in profits as a result.