Ethanol Producers Question ADM’s Ethics

Nov 17, 2020

ADM is in the hot seat.

Six more companies joined the litigation club alleging that ADM manipulated ethanol markets by depressing prices. In total, nine ethanol producers are now involved in similar lawsuits against the commodity giant.

The claim? ADM used ‘economically irrational’ moves in their ethanol trading.

In other words, ‘buy low, sell high’ was not their strategy.

Instead, ADM bought when prices and margins were high in 2017. Then, they reserved course, selling in waves as the Chicago benchmark price bottomed out at 15-year lows.

All of this, allegedly, created a price-depressing scenario for other market players.

ADM has attempted to have the court dismiss one of the cases, claiming the law does not allow for lawsuits related to losses selling a commodity like ethanol.

So, what’s next: With ethanol production at multi-month highs, the spotlight on ADM will be bright as this plays out in court.