District Court Judge Wayne Anderson issued a direct verdict in favor of the Chicago Board of Trade, dismissing a 13-year-old lawsuit by soybean farmers who accused the exchange of bilking them out of millions of dollars.

The ruling Oct. 10 came in a lawsuit in which the plaintiffs had argued that a 1989 emergency order by the CBOT caused November soybean futures to plummet at a time when market forces seemed to be pushing prices higher.

“At the CBOT, we take great pride in the integrity of our markets and members. That is why I am pleased that the completion of the plaintiff's case in this matter caused Judge Andersen to render a verdict in favor of our exchange,” said Nickolas Neubauer, CBOT chairman, in a statement issued following the verdict.

Despite CBOT officials' happiness with Andersen's ruling, even the judge expects his decision to be appealed. Plaintiff attorneys immediately promised to do that in the Seventh Circuit Court of Appeals. They have 30 days to file.

In 1988, the United States experienced a severe drought. A poor crop reduced soybean stocks to a 12-year low. The following year, market prices in east Arkansas were around $7.50 per bushel. Many farmers were still holding 1988 soybeans, expecting the prices to go even higher. All indications were prices were heading up due to short supplies up and down the pipeline.

On July 11, 1989, CBOT issued an emergency order. The board claimed the market was artificial and they had to take steps to correct it. CBOT mandated that anyone holding large contracts for soybeans had to liquidate them. When that order was given soybean prices dropped 40 cents almost immediately.

In an odd admission, Andersen wrote that his opinion might be wrong and that farmers really were hurt by CBOT actions in 1989.

“First, it is possible that farmers who sold soybeans based on July futures prices in the immediate aftermath of the drastic actions of July 11, 1989, did get paid less for their soybeans. It does appear that the market was jolted for at least a day or two,” Anderson said.

“And I want to say, also, I could be wrong. I have a duty to do, and I don't think there could be any reasonable outcome that's different than this. So, if it turns out that the Court of Appeals disagrees, so be it,” wrote Andersen.

After Andersen's decision, Neubauer said plaintiff charges of CBOT conflicts of interest and artificially depressed cash markets were wrong.

“Both the Commodity Futures Trading Commission, the federal regulatory agency that oversees our markets, and the U.S. General Accounting Office agreed with our taking such action,” he said.


e-mail: dbennett@primediabusiness.com.