Heinz, prepare for a little buyer’s remorse: According a lawsuit filed yesterday, Kraft allegedly duped the market in 2011 by using “manipulative trading strategies” to reduce the price of wheat. At the time, Kraft and Mondelez were still united (the companies split the following year), and they used about 30 million bushels of a certain type of “soft” wheat annually to make products like Oreos, Ritz Crackers, and Wheat Thins.
But droughts that year increased the price of wheat, and the U.S. Commodities Futures Trading Commission claims that Kraft acted like it was going to buy a six-month supply of wheat for $90 million to fool traders into driving the cost back down. According to the agency, that’s exactly what traders did, allowing the company to pocket a cool $5.4 million.
The lawsuit cites a ton of shady-sounding emails between Kraft executives. In one, Kraft’s head of global procurement estimates that “if all goes according to plan,” the trick should save them $7 million and earn them an additional $3 million. It’s actually a relative puny payoff for a billion-dollar behemoth — and one confused economist tells Reuters that if Kraft did manipulate prices, it was pretty dumb not to do it “in a bigger way than that.”
