ADM: Expert Shows Plaintiff Unharmed

ADM Says Court Expert Finds Plaintiff Unharmed by Ethanol Market Actions

Todd Neeley
By  Todd Neeley , DTN Environmental Editor
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Archer Daniels Midland and AOT Holding AG continue filing motions in an ongoing ethanol markets lawsuit. (DTN file photo by Pamela Smith)

LINCOLN, Neb. (DTN) -- A court-appointed expert in an antitrust lawsuit has concluded plaintiff AOT Holding AG may not have suffered economic injury from alleged ethanol-trading actions taken by Archer Daniels Midland, the company said in a document filed in a federal court on Oct. 6.

Both sides agreed to hire an expert to judge the credibility of AOT expert witness Shawn Ledgerwood, a former economist at the Office of Enforcement of the Federal Energy Regulatory Commission. Ledgerwood developed an economic model the plaintiffs purport to show that ADM allegedly manipulated ethanol markets at the Argo terminal in Illinois.

The U.S. District Court for the District of Central Illinois appointed Jeffrey M. Wooldridge, the university distinguished professor of economics at Michigan State University. Wooldridge specializes in econometrics and is the author of two leading textbooks on the subject.

Earlier this year Wooldridge submitted a report on his findings and those findings were sealed by the court.

"As explained in ADM's renewed opposition to class certification, the report of court-appointed expert Jeffrey Wooldridge shows that AOT suffered no injury and therefore cannot be a class representative," ADM said in its opposition filed last week.

"In addition, AOT's head ethanol trader viewed AOT as being engaged in a one-on-one 'battle' with ADM. As part of the battle, AOT used an unusual trading pattern: long a vast number of ethanol futures at the end of 2017 but net short few ethanol futures throughout 2018 and 2019. This trading pattern gives AOT conflicts with class members who were not 'battling' ADM and who were net long in 2018 and 2019. AOT's renewed motion therefore cannot in any event show that AOT is typical and adequate."

AOT since has asked the court for leave to file what would be a renewed motion for partial summary judgement in the case. Such a motion asks a court to issue a ruling based on undisputed facts.

ADM opposed AOT's request as well as a previously filed motion for class certification.

Class certification is an order by a judge that certifies the right of plaintiffs to proceed on behalf of a designated class of claimants in a class-action lawsuit.

Leading up to trial ADM has asked the court to exclude Ledgerwood's report and testimony.

Ledgerwood developed a so-called regression analysis model on behalf of the plaintiffs AOT Holding and Maize Capital Group LLC. Wooldridge was assigned to analyze the model.

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

AOT and other companies have alleged that ADM manipulated ethanol prices, violating the Commodity Exchange Act.

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.

Earlier this summer, the court issued an order outlining the next steps in the AOT case. That was to include briefing and discussions about Ledgerwood.

The court ruled previously that an ADM motion for summary judgement would be considered before AOT's summary judgement motion filed about one year ago.

Another similar lawsuit filed by Midwest Renewable Energy is also continuing in the same court.

Read more on DTN:

"ADM, Plaintiffs Agree on Expert Analyst,"…

"Expert: ADM Manipulated Ethanol Market,"…

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Todd Neeley

Todd Neeley
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