Kraft seeks dismissal of two counts in wheat price manipulation case
(Reuters) - Kraft Foods Group Inc KRFT.O and Mondelez International Inc (MDLZ.O: Quote) petitioned a judge to dismiss two counts in a case filed by the U.S. Commodity Futures Trading Commission that alleged the companies manipulated wheat prices.
The CFTC in April accused Kraft Foods and Mondelez of making massive bets in Chicago's futures markets in late 2011 as part of a plot to drive down the physical price of wheat they used in products such as Oreo cookies and Ritz crackers.
The CFTC said the companies had violated speculative position limits and engaged in numerous noncompetitive trades in wheat.
Kraft made reasonable business decisions to maintain a steady wheat supply in the face of a "dysfunctional" wheat market where cash prices bore little relation to those on the futures market, the companies said in a court filing on Monday.
The company's actions in 2011 "tell a straightforward story of a snack-food company doing the best it could to purchase wheat at sound prices in a difficult market," they said.
Kraft spun off its snacks business into Mondelez in 2012. CFTC's complaint focused primarily on trading that occurred before the split.
The companies sought dismissal of the two counts saying CFTC's allegation that wheat prices changed as a result of Kraft's transactions was insufficient to infer it deceived or manipulated the market.
Also, Kraft's attempt to obtain the best wheat price necessarily means it lacked the "ability" or "intent" to create an "artificial price," the companies said in the filing.
Reuters could not immediately reach the CFTC for comment outside regular U.S. business hours. Continued...