ADM Wants Ethanol Lawsuit Dismissed

Archer Daniels Midland Seeks to Move, Dismiss Ethanol Markets Lawsuit

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Archer Daniels Midland has asked a federal court in Nebraska to dismiss a lawsuit alleging ethanol market manipulation. (DTN photo by Chris Clayton)

LINCOLN, Neb. (DTN) -- Archer Daniels Midland asked a federal court in Nebraska to dismiss an ethanol markets lawsuit filed by Green Plains Inc. and for a change of venue in the case, according to motions filed in the U.S. District Court for the District of Nebraska.

Green Plains filed a new lawsuit in the Nebraska court in October, 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 U.S. District Court for the District of Central Illinois dismissed a 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.

ADM motioned to have the latest lawsuit transferred to the Illinois court where other similar cases are pending.

In the new lawsuit filed in Nebraska, Green Plains said it had "valid contractual relationships" tied to various ethanol-pricing benchmarks.

"The dismissal should be with prejudice, for two related reasons," ADM said in a new brief.

"First, plaintiffs have already had two opportunities to plead their claims in the two complaints they filed in this court. They filed their second complaint here long after seeing ADM's arguments for dismissal -- the same arguments being made now -- and they have never changed their state-law claim. Plaintiffs still have not pled any specific contracts ADM supposedly interfered with, ADM's knowledge of those contracts, or any breach or termination as a result of ADM's alleged conduct."

ADM has a pending motion in the Illinois court, asking that court to continue jurisdiction over all similar cases.

Green Plains argues in its new lawsuit that ADM was "aware of these valid contractual relationships, 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," the lawsuit said.

"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.

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 alleged 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 industrywide 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.

Read more on DTN:

"ADM Wants Ethanol Case Transferred,"…

"Court Dismisses Ethanol Market Lawsuits,"…

"Iowa, Wisconsin Ethanol Plants Sue ADM,"…

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Todd Neeley

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