manipulation, market power, Benford’s Law, Ferruzzi, soybeans


This paper proposes that Benford’s Law is an effective tool for determining futures market irregularities and therefore should be adopted and used in efforts to detect and prevent manipulation in the agriculture commodities futures market. Market manipulation, while hard to define and even harder to detect and prevent, has long been a concern for traders and regulators alike. Market power manipulation – the intentional use of monopolistic power to cause market prices to diverge from their competitive level – harms the market by eroding its efficiency and impairing market integrity thereby driving away potential traders and ultimately undermining financial markets, investments, and the economy as a whole. An effective, accurate, and readily understood economic analysis method for easy detection of market manipulation is needed. This paper examines the data from the alleged 1989 Ferruzzi soybean futures market “squeeze” with the hypothesis that a deviation from uniform price distribution should be found in 1989. Through the application of Benford’s Law, this paper confirmed the existence of market manipulation in May of 1989. Moreover, the findings further suggest: 1) the possibility of manipulation in the soybean futures market in 1987 and 1988 prior to the Ferruzzi incident, 2) that the Chicago Board of Trade’s forced liquidation orders prevented or minimized the effects of the Ferruzzi squeeze in July of 1989, and 3) Benford’s Law is an effective method for detecting futures market irregularities and therefore promises to be a potentially useful tool in the early detection and prevention of market power manipulation.

Date Accepted


Date Submitted


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