Archer Daniels Midland asked a federal court in Nebraska to stay a new ethanol markets lawsuit filed by Green Plains Inc., arguing this week the case should be moved to a federal court in Illinois where similar cases are pending.
ADM has a pending motion in the U.S. District Court for the District of Central Illinois, asking that court to continue jurisdiction over all similar cases. A previous Green Plains lawsuit that was a class action was dismissed by the Illinois court.
On Oct. 26, Green Plains filed a new lawsuit in the U.S. District Court for the District of Nebraska, alleging ADM conducted a scheme to illegally depress the ethanol cash spot market beginning in November 2017. Green Plains alleges ADM’s actions harmed its business.
The Nebraska lawsuit details how Green Plains believes ADM used the futures market to lower ethanol prices and hurt GP’s bottom line.
In August 2021, the Illinois court dismissed the previous Green Plains lawsuit that argued the same claims. The court ruled the company did not have standing to sue under the Commodity Exchange Act.
In the new lawsuit filed in Nebraska, Green Plains said it had “valid contractual relationships” tied to various ethanol-pricing benchmarks.
“ADM was aware of these valid contractual relationships of plaintiffs that were tied to the pricing benchmarks,” the lawsuit said, pointing to the period from November 2017 through at least September 2019 as the time of the alleged manipulation.
“In fact, ADM and plaintiffs are parties to contracts with one another in which the price paid and received is tied to the pricing benchmarks. ADM, through its unlawful manipulation, intentionally interfered with these valid contractual relationships of plaintiffs that were tied to the pricing benchmarks.”
Green Plains claims it suffered damages through lost profits, a diminishment in future earning capacity, “reputational harm,” impairment of business relationships and “consequential” losses.
Green Plains alleges ADM executed a three-step strategy that included lowering prices at the Argo terminal in Illinois by “flooding” the terminal with ethanol to lower the price.
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The Argo terminal is the daily location for ethanol trading. The 30-minute trading window at the terminal is considered crucial because it is used to set the daily Chicago benchmark price to determine the value of Chicago ethanol derivatives.
That benchmark is used to price and settle ethanol derivatives on the New York Mercantile Exchange and the Chicago Board of Trade.
Second, Green Plains alleges ADM sold on average 1 million gallons of ethanol daily and adversely affected the pricing of more than 32 million gallons of physical ethanol produced industry-wide each day.
Green Plains said ADM’s actions were contrary to what most ethanol producers would do based on market conditions.
Green Plains said starting in November 2017, ADM was a buyer at the Argo Terminal on the market on close, or MOC, window just once at 210,000 gallons. The MOC window is when traders execute trades as close to the closing price as possible.
Green Plains said ADM, however, “was a seller at all other times for a total of approximately 821 million gallons — a sea change from their pre-November 2017 trading behavior in which ADM was consistently a buyer.”
Similar lawsuits filed by AOT Holding AG and six ethanol companies remain on track for a 2024 trial. In November 2020, Wisconsin producers United Wisconsin Grain Producers, Didion Ethanol, Ace Ethanol, Fox River Valley Ethanol, Badger State Ethanol and Iowa producer Pine Lake Corn filed their lawsuit.
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Todd Neeley can be reached at email@example.com
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