Ethanol Blog

LINCOLN, Neb. (DTN) -- Both sides in an ethanol markets class-action lawsuit against Archer Daniels Midland were back in court in December, holding an evidentiary hearing on whether to allow the testimony of an expert witness for plaintiff AOT Holding AG.

One year ago, ADM asked the U.S. District Court for the District of Central Illinois, to exclude the expert testimony of plaintiff witness Shaun Ledgerwood in a lawsuit that alleges ADM manipulated the ethanol market at the Argo terminal in Illinois.

Ledgerwood developed an economic model the plaintiffs, AOT Holding AG, allege to show that ADM manipulated ethanol markets at the terminal.

"Finally, the court would remind the parties to endeavor to the best of their ability, to simplify their arguments so that they are comprehensible to the average person who does not have an advanced degree in econometrics and higher-level mathematics," the court said in an order filed on Dec. 13.

"As evidenced by the expert reports and the testimony at the evidentiary hearing, the methodology in this case is incredibly complex, involving an intimate knowledge of the science of econometrics. The parties should strive to minimize the amount of jargon and reliance on mathematical equations in their briefs."

The court set a briefing schedule that requires ADM to file a motion to exclude Ledgerwood from the case within 30 days after a transcript of the hearing is available. AOT then is required to file a response 30 days later, following by a second ADM response 14 days after that.

AOT and ADM agreed to hire an expert to judge the credibility of the AOT expert witness, who is a former economist at the Office of Enforcement of the Federal Energy Regulatory Commission.

Court-appointed expert Jeffrey M. Wooldridge, the university distinguished professor of economics at Michigan State University, reportedly concluded AOT did not suffer economic damage from ADM's alleged actions.

On Dec. 6, 2024, the court held an evidentiary hearing during which Wooldridge, Ledgerwood and ADM's expert David Kaplan testified.

AOT is one of two companies that have sued ADM alleging market manipulation. The second is Midwest Renewable Energy.

The court said in its order this month that briefing schedules would be set for renewed motions to certify class and summary judgement, after the court rules on Ledgerwood. A summary-judgement motion asks a court to issue a ruling based on undisputed facts.

Specifically, AOT has alleged ADM suppressed the daily benchmark price of ethanol to benefit its short positions. AOT has alleged ADM's actions benefited the company by increasing the value of ADM's "short" or "hedged" ethanol positions.

AOT filed a class-action lawsuit in May 2020, alleging ADM manipulated the daily ethanol market at the Argo terminal by flooding the fuel terminal with lower-priced ethanol starting in November 2017 through March 2019. The specific trading in question occurred during the 30-minute "market-on-close," or MOC, window.

Ledgerwood developed a so-called regression analysis model on behalf of AOT Holding and Maize Capital Group LLC.

At the beginning of October 2022, the court denied an ADM motion to exclude Ledgerwood's testimony and report. Ledgerwood used several inputs in the model to show ADM allegedly manipulated the market.

That includes the futures price of corn; wages paid to manufacturing workers; electricity and natural gas prices; prices of byproducts of ethanol production; railroad transportation costs; storms or other severe weather in Illinois; the gasoline price in New York Harbor; the price of renewable identification numbers, or RINs; the amount of ethanol and gasoline stocks in the U.S.; and U.S. imports and exports of ethanol and Chinese tariffs on those.

ADM has argued that Ledgerwood and his report are not admissible because the model almost always finds ethanol-price suppression on ADM's part and that he used the wrong model and data for pricing, among other issues.

Read more on DTN:

"ADM Moves to Exclude Expert Witness," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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