Green Plains sues Archer Daniels Midland, alleging ethanol market manipulation

Source: By P.J. Huffstutter, Reuters • Posted: Wednesday, July 15, 2020

CHICAGO (Reuters) – Green Plains Inc, one of the biggest U.S. ethanol producers, sued Archer Daniels Midland Co on Tuesday, accusing the global grain trader of manipulating the price of the biofuel to profit from its positions in the derivatives market.

Green Plains filed the proposed class action with the U.S. District Court of Nebraska, where it also claimed that senior ADM officials knew of the alleged manipulation.

ADM did not respond to a request for comment.

The lawsuit seeks unspecified damages. It follows reporting by Reuters that ADM’s ethanol selling had led traders to complain to S&P Global Platts, which provides benchmark pricing for the physical ethanol contract at different U.S. delivery points.

According to the complaint, ADM was aggressively selling ethanol on the cash market at the Argo terminal just outside of Chicago – and timing such selling 30 minutes ahead of the close of the trading day.

Green Plains also said ADM flooded the terminal with its barges, to choke off competitors’ supplies and influence the price of spot and futures ethanol markets.

ADM “knew that it would take hard-earned money out of the pockets of other ethanol producers by depressing prices at the Argo Terminal, hurting the producers and imposing downstream pain on corn farmers and cooperatives,” according to the complaint.

A similar lawsuit was filed last September by AOT Holdings, a Swiss company with an energy trading subsidiary, in an Illinois federal court, seeking up to $6.33 million in damages.

The case is Green Plains Trade Group LLC et al v Archer Daniels Midland Co, U.S. District Court, District of Nebraska, No. 20-00279.

Reporting by P.J. Huffstutter in Chicago; Editing by Tom Brown