ADM Ethanol Markets Lawsuit Dismissed

Federal Judge Dismisses Ethanol Lawsuit Against Archer Daniels Midland

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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A federal court this week dismissed one of three ethanol markets lawsuits filed against Archer Daniels Midland. (DTN file photo)

LINCOLN, Neb. (DTN) -- A federal court in Illinois dismissed one of three ethanol market lawsuits against Archer Daniels Midland this week, outlining in an order that six ethanol companies in Iowa and Wisconsin were unable to prove antitrust injury.

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 a lawsuit in the U.S. District Court for the Central District of Illinois in Urbana.

The lawsuit alleged ADM intentionally manipulated and artificially depressed the price of ethanol in the United States by targeting ethanol sales activity at the Argo terminal in Illinois. 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 price is used to price and settle ethanol derivatives on the New York Mercantile Exchange and the Chicago Board of Trade.

In dismissing the case this week, the court said the ethanol companies could not prove any of their ethanol was sold at the Argo terminal or that ADM's actions drove other ethanol producers out of business.

The lawsuit said from 2017 to 2019, ADM controlled 70% of the Argo terminal market and accounted for 90% of ethanol sold during the critical market window.

As part of an amended complaint filed by the companies, they provided a list of companies that either shut down ethanol plants altogether or reduced production during the time in question. However, the court said the ethanol companies in Iowa and Wisconsin failed to identify a single ethanol company that was forced to exit the Argo terminal market.

"Plaintiffs insist that while the Argo terminal market was the actual site of ADM's conduct, the ultimate goal was the reduction of ethanol prices in the U.S. market generally, through the Argo terminal's unique role in the price-setting system," the court said in its ruling.

"Plaintiffs make no argument that those producers exited the Argo terminal market or that the amended complaint plausibly states such a fact."

Two similar lawsuits are pending in the same court, including a complaint filed by Omaha-based Green Plains Inc. and AOT Holdings, a Swiss company that owns an energy-trading subsidiary.

All of the lawsuits have made similar allegations.

The six ethanol companies said in their original complaint that from 2017 to 2019, ADM allegedly engaged in 'uneconomic' activity at the Argo terminal.

They alleged ADM bought ethanol at the terminal when prices were high and "shifted toward becoming a massive seller" when prices and margins declined.

Read more on DTN:

"Iowa, Wisconsin Ethanol Plants Sue ADM," https://www.dtnpf.com/…

"ADM Ethanol Market Case Resumes in Illinois," https://www.dtnpf.com/…

"ADM Granted Venue Change in Lawsuit," https://www.dtnpf.com/…

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

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Todd Neeley