Onion Futures In The USA

[Min Bannister]

Have you ever thought about what a great idea it would be to trade in onion futures in the USA? Well who hasn't? Unfortunately it is illegal, and here is a brief summary of why.

In 1955, two Chicago onion traders Sam Siegal and Vincent Kosuga bought so many onions and onion futures (an agreement to pay a set price at some point in the future.) that they eventually controlled 98% of the available onion supply there. They bought and stored so many onions that they were eventually able to threaten onion growers to buy their stock, otherwise they would flood the market with excess onions in order to bring the price down. Once the growers began repurchasing onions, Siegal and Kosuga began shorting onions (that is betting on a future price drop on onions - one that they were about to instigate themselves).

Meanwhile, due to the huge stock of onions that were beginning to get mouldy in the onion warehouses, they shipped them elsewhere to be cleaned and repackaged in order to look fresh again. Seeing huge shipments of "new" onions returning to Chicago made other futures traders think there was an even bigger excess of onions than there already was, driving down the price still further. Over a matter of months, the price of a sack of onions had gone down from $2.75 to just 10 cents -less than the price of the bags that held them.

Siegal and Kosuga made millions due to the short selling they had done but many onion growers went bankrupt since they lost so much money buying worthless stock. Some even had to pay to have their stock destroyed.

And meanwhile, due to the original supplies of onions that had been bought in from other states but sold only to Chicago growers, there was a shortage of onions elsewhere in the US...

Legislation was brought in in order to prevent such a thing happening again. And that ladies and gentlemen, is why it is now illegal to trade in onion futures in the US!

Here is the Wikipedia entry which I have summarised:-https://en.wikipedia.org/wiki/Futures_contract

I heard about this on the iilluminaughtii podcast. You can search for this on your podcast platform or it is available from Youtube. The onion section starts at about 15 minutes.

 

[IbisNibs]

This is truly one of the most burning questions of our times, why can we not invest in onion futures?
By making this information available, Min Bannister, you and the podcasters of iilluminaughtii have saved us from many sleepless nights of wondering why, oh why! can we not invest in onion futures! You have also shown us that the world is indeed improving, and in the case of onions, has improved by 50%. Where once there were two ways onions could make us cry, now there is only one. Hurrah!

(Don't mind me, I'm just waiting for the inspector to arrive. Don't ask.)

 

[kamalktk]

I wore an onion on my belt, as was the style at the time.

 

[Ermintruder]

I wore an onion on my belt, as was the style at the time.

So I've heard....Now, to take the ferry cost a nickel, and in those days, nickels had pictures of bumblebees on 'em!

And that ladies and gentlemen, is why it is now illegal to trade in onion futures in the US!

I'd never wondered about this topic until now, but this has certainly filled an gap in my broader understanding of alliums.

And if I hadn't read further than the title, I might've thought the thread was in some way related to America's fear of semi-edible rounded objects:

Why Kinder Eggs are illegal in the USA

 

[Cloudbusting]

Why Kinder Eggs are illegal in the USA

Wow you learn something new every day! It does seem ironic that guns flow freely through the US yet kinder eggs are seized at the border. That said someone told me they had to recall and redesign Yankee Candle wax melts because some kid tried to eat one.