FINANCIAL MARKETS : Ferruzzi to Sue Trade Board

Italian grain group Ferruzzi Finanziaria S.p.A. said Friday that it would sue the Chicago Board of Trade because of an order forcing the company to sell millions of bushels of soybeans.

“Ferruzzi and all major world operators are convinced that the Board has made a mistake and must suffer the consequences,” a company statement said. “Ferruzzi has therefore decided to take legal proceedings against the CBOT in the fullest manner for compensation of damages.”

The statement echoed comments made earlier by company Chairman Raul Gardini in Paris, where he led an emergency meeting of top Ferruzzi executives and representatives of its U.S. soybean subsidiary, Central Soya Co.

The CBOT, citing fears that an attempt was being made to corner the soybean market, ordered traders Tuesday to reduce their holdings to a maximum 1 million bushels, compared to the contracts for 23 million bushels held by Ferruzzi.

Any player with a large enough share of the market--a position referred to as “cornering the market”--theoretically could force those on the other end of its futures contracts to deliver, possibly causing a scramble for supplies that would drive the price of its soybeans up sharply.

Ferruzzi has denied any speculative intention and said the holdings were to cover its processing and export needs.

Gardini said he could not tell in what court or when he would launch his suit.

In a related development, the federal Commodity Futures Trading Commission said Friday that it would review the trading positions of Board of Trade directors to see whether any of them had profited from the drop in soybean prices precipitated by the emergency order on Tuesday.