The Onion Futures Act prohibits trading in onion futures in the United States — but this wasn't always the case. During the early 1950s, onion futures trading accounted for about 20 percent of all trades on the Chicago Mercantile Exchange. It was already a volatile market, because onions go bad fairly easily, but in 1955, a New York onion grower, Vincent Kosuga, and a Chicago produce distributor, Sam Siegel, bought up 98 percent of the onion market in Chicago and made millions of US Dollars short selling, which led to a crash. The Commodity Exchange Authority called a hearing, and then-Senator Gerald Ford proposed the Onions Futures Act.
More facts about onions and trading:
- The Chicago Mercantile Exchange was originally the Chicago Butter and Egg Board but stopped trading butter futures when the federal dairy subsidies started in the 1930s. Onions filled the gap until 1955.
- When the onion market crashed, entire bags of onions sold for less than cost of the burlap sacks holding them.
- As of 2011, the Onion Futures Act was the only law prohibiting futures trading on any specific commodity in the U.S.