WASHINGTON, DC, US — Ceres Global Ag Corp. has agreed to pay a civil penalty of $3 million to the Commodity Futures Trading Commission (CFTC) to settle charges of attempting to manipulate the oats futures contracts in 2016 and 2017.

Ceres said the company had been cooperating with the CFTC and Department of Justice since they began probing the situation in 2021.Ceres said it does not currently anticipate any other charges or fines arising from the investigation.

“We are glad to have resolved the matter and appreciate the CFTC’s acknowledgement of our cooperation related to these historical matters,” said Carlos Paz, chief executive officer of Ceres.

According to the CFTC order handed down on Oct. 23, senior personnel at Ceres knew about and facilitated the building of large long positions at or close to the spot month speculative limits, holding those long positions into the delivery period, and taking delivery of oats, intending both to boost the price of oat futures in those contracts and to obtain higher quality oats at lower delivery prices.

The order said a former officer in June 2016 directed the company’s oat traders to flip the company’s existing short position in the July 2016 oat futures contract and attempt to reach a long position of 600 contracts, or 3 million bushels, the speculative position limit set by the exchange. 

In addition to building its long futures position, the former officer directed oats traders to buy back shipping certificates the company previously tendered to other market participants in a way that would not “tip (their) hand” about Ceres’s plan to take delivery at the expiration of the contract. In connection with this attempt to affect the July 2016 oats futures contract price, Ceres took delivery of 484 contracts and entered into offsetting transactions of an additional 53 contracts.

The order also finds Ceres engaged in similar activity in connection with the March 2017 oats futures contract, again intending to affect the futures price. The company built a long position in the March 2017 oats futures contract, held its long position into delivery, and took delivery of 337 contracts and entered into offsetting transactions of an additional 224 contracts, even though it had no immediate need for the oats.

The CFTC order requires Ceres to cease and desist from further violations of the Commodity Exchange Act (CEA) while also recognizing that Ceres has undertaken significant remedial steps to ensure future compliance.

“The CFTC will act decisively to protect all its agricultural markets, as well as the producers, market participants, and consumers who rely on them,” said Ian McGinley, director of enforcement for the CFTC.

Ceres is headquartered in Minneapolis, Minnesota, US, and together with its affiliated companies, operates 11 locations across Saskatchewan, Manitoba, Ontario, and Minnesota. These facilities have an aggregate grain and oilseed storage capacity of approximately 29 million bushels.

Ceres has a 50% interest in Savage Riverport, LLC (a joint venture with Consolidated Grain and Barge Co.), a 50% interest in Berthold Farmers Elevator, LLC (a joint venture with The Berthold Farmers Elevator Company), a 50% interest in Farmers Grain, LLC (a joint venture with Farmer's Cooperative Grain and Seed Association), a 50% interest in Gateway Energy Terminal (an unincorporated joint venture with Steel Reef Infrastructure Corp.), a 25% interest in Stewart Southern Railway Inc. (a short‐line railway located in southeast Saskatchewan with a range of 130 kilometers), and a 17% interest in Canterra Seeds Holdings Ltd. (a Canada‐based seed development company).