Green Plains Inc. and its subsidiaries filed a complaint in the District of Nebraska against ADM alleging it had manipulated the derivative contracts market and violated the Commodities Exchange Act reports Law Street.
The complaint alleges ADM produces ethanol at multiple bioprocessing stations in the United States and then sells that ethanol into cash spot markets, particularly the Kinder Morgan Argo Terminal in Argo, IL.
The complaint purports that the Argo Terminal is the cash spot market that is used as a price reference point for nearly all physical and financial ethanol transactions across the world. Further, the complaint states the overwhelming majority of ethanol sales contracts, including the plaintiffs’, are priced based on the Argo Terminal-based price index.
According to the plaintiffs, since 2017, the defendant has purposefully manipulated the Argo Terminal-based price index to profit off of financial derivative contracts that increased in value as the price of ethanol at the Argo Terminal decreased. The plaintiffs argue the defendant manipulated the market by “flooding” the Argo Terminal with over a million gallons of ethanol a day and sold it at intentionally low prices to depress the market.
Read the full report here.
