From the very beginning commodity markets have been manipulated by unscrupulous companies and individuals.

For the most part attempts to reign in large-scale rip-offs designed to create artificial prices in the futures and/or cash markets to rake in illegal profits have been ineffective. (For an amazing look at the history of commodity market manipulation Jerry W. Markham’s lengthy 1991 tome “Manipulation of Commodity Futures Prices – The Unprosecutable Crime” is enlightening.)

Reading Markham one comes away with the distressing view that not only is manipulation of commodities a rather common occurrence but that the U-S government’s efforts to put a stop to it has been a joke.

Yes it’s true, that once in a while a company or individual does something so outrageously stupid that the government wakes up out of a slumber and recognizes a manipulation for what it is.

But when it comes to commodity manipulation the government has been over-matched.

For the purpose of this blog we’re going to look at just two major, major commodity manipulations that share a common thread.

The first is perhaps the largest attempted manipulation of commodities in U.S. history.

The first has come to known as the Great Silver Caper. In 1973, the Hunt Brothers – Bunker and Herbert – began buying silver future contracts through various brokers on the New York market.

By early 1974, the Hunts had accumulated enough future contracts that they could eventually secretly take delivery on 55 million ounces of silver – roughly 9% of all the silver on earth.

And that’s what they did for the low ball price of $175 million.

But by the spring of 1974, the rumor mill kicked into high gear. Would the Hunts sell potentially collapsing the price of silver on the exchange … or buy more? By then silver prices had risen to more than $6 an ounce.

But that was just the beginning. Over the next few years, the Hunts and their allies (including secret foreign trading partners) kept buying silver contracts and taking delivery of the physical silver.

By late 1979, the Hunt’s controlled 62 percent of all the silver on the planet and silver futures prices skyrocketed. On January 17 of the following year silver prices went over $40 an ounce.

To say the Commodity Futures Trading Commission hadn’t a clue as the the Hunt’s activities would be an understatement.

In fairness the CFTC was hamstrung by existing idiotic laws including the Commodity Exchange Act of 1936 which while giving the federal government power to regulate the market including bringing sanctions against manipulators failed to define just what constituted manipulation of the future markets. Duh.

Here’s how the saga ended.

The commodity exchanges cleaned up the CFTC mess by changing the rules, announcing no one – that’s NO ONE – could buy any more silver. Investors could only sell silver to exchange approved buyers. The next day silver futures were down some $6 an ounce.

To cover their positions the Hunts had to borrow money from banks to make margin calls.

And then in March, U.S. Federal Reserve chairman Paul Volcker dropped the hammer by ordering U.S. banks to curtail loans for speculative holdings of commodities or precious metals. School was out on the Hunts who couldn’t pay a March 26 $135 million margin call. By then silver futures had fallen to under $11 an ounce.

In the aftermath of the Hunts debacle the Commodity Exchange Act was amended in 1982 to make violations of commodity exchange position limits violations of the CEA itself.

But the CEA rule change hasn’t slowed down the bilking of commodity exchanges.

Hello Kraft-Heinz Company and Mondelez Global LLC.

Back before Kraft renamed itself Mondelez and spun off its North American Kraft Foods business, there was market manipulation hanky panky. This time the commodity was wheat.

Typically food companies obtain their raw products in the cash market. In the case of wheat Kraft historically purchased its supply in the Toledo, Ohio cash market and used the Chicago Board of Trade to protect its cash prices.

But in late 2011 cash prices were actually higher than the cost of wheat on the futures market. Not a enviable position for a wheat buyer in immediate need of wheat like Kraft Foods.

That’s when Kraft decided breaking the law was a better option than paying up for wheat on the cash market.

What Kraft Foods did was obtain December 2011 wheat futures with the idea of taking delivery (similar to the Hunt brothers taking delivery on all that silver).

But in truth Kraft Foods never took delivery (as an aside the quality of wheat in the futures market due to blending is typically inferior to what can be purchased in the cash market).

But Kraft Foods very public purchase in the futures market resulted in higher future prices and lower cash prices. When that occurred Kraft foods reversed its positions….selling its futures position for a profit and physically buying cheaper wheat on the cash market.

Eventually the CFTC caught wind of what Kraft was doing and filed a civil action case against Kraft Foods in 2015.

Among other things the civil action alleged:

Kraft did not have a bona fide commercial need for the long futures position that it acquired in December 2011 wheat…Kraft held long positions in December 2011 wheat that exceeded the mandated speculative position limit for wheat on December 2, 5, 6, 7 and 8 by 2,110, 2106, 1,666, 1,226 and 226 contracts respectively.”

This August the CFTC announced that Mondelez and Kraft-Heinz agreed to pay a $16 million penalty for its 2011 commodity market manipulation.


Kraft-Heinz, the company that bills itself “as a socially responsible global food company commited to reducing our environmental footprint and proecting the planet’s natural resources for future generations” is dirty dear reader.

Except Kraft-Heinz didn’t want people to know about its wheat walk on the dark side. As it turns out the CFTC was supposed to keep all this hush-hush. Now Kraft-Heinz is suing the CFTC for contempt.

I guess they don’t want to tarnish that shiny image they’ve laid on the public.

Anyway I got to say the CFTC August 15 announcement (since taken down from its website) ain’t worth squat.

Kraft-Heinz doesn’t have to admit any wrong doing and initially reached a deal to keep the fine secret from the public? Are you kidding me?

The futures and cash markets require transparency in order to maintain public trust. And this ain’t getting it.

About Dave Dickey

Dave Dikcey

Dickey spent nearly 30 years at University of Illinois at Urbana-Champaign’s NPR member station WILL-AM 580 where he won a dozen Associated Press awards for his reporting. For 13 years, he directed Illinois Public Media’s agriculture programming. His weekly column for the Midwest Center covers agriculture and related issues including politics, government, environment and labor. His opinions are his own and do not reflect the Midwest Center for Investigative Reporting. Email him at

Type of work:

David Dickey always wanted to be a journalist. After serving tours in the U.S. Marine Corps and U.S. Navy, Dickey enrolled at Rock Valley Junior College in Rockford, Ill., where he was first news editor...

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