Crop trader Olam to pay US$3.3 million fine for delayed cotton sales reports

CROP trader Olam Group will pay a US$3.3 million fine for delayed reporting of cotton sales to the US Department of Agriculture (USDA) and the Commodity Futures Trading Commission (CFTC), a move that could have impacted cotton prices.

Olam delayed reporting five cotton sales to an Asian buyer in 2021, the CFTC said on Friday (Sep 27). The sales, which were reported as much as five weeks late, amounted to more than 375,000 bales of cotton with a value of over US$190 million, according to the CFTC.

Companies such as Olam report cotton sales to the USDA, which then releases weekly and monthly export reports that are often used as an indicator of cotton demand.

The delay “resulted in the publication of inaccurate and misleading information regarding cotton sales, undermining faith in a key indicator of supply and demand, and potentially impacting the integrity of commodities pricing,” Ian McGinley, the CFTC’s director of enforcement, said in a statement.

The CFTC said Olam knew “that information indicating Olam’s counterparty might be purchasing large quantities of US cotton is a significant market indicator that affects or tends to affect the price of cotton.”

The Asian buyer, who was not named, is “typically one of the largest global purchasers of cotton”, the CFTC said.

Olam Group, based in Singapore, said in a statement that it cooperated fully with the CFTC’s investigation and had agreed to pay the fine without admitting or denying the findings. BLOOMBERG