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thekremlin · 09-22-2010, 10:37 AM

Interesting article
Onion Farmers, Hollywood Futures and the Law - NYTimes.com

Background, quoted from someone on some food forum where people complain about the prices for vegetables. (I need better references)

"Just fyi on onion prices. Interesting history. There is no futures market on onions to keep prices somewhat stable.

The onion derivatives ban, however, would continue one of the most unlikely elements of US legislation - a 1958 crackdown on onion futures engineered by a future Republican president, Gerald Ford, while he was a Michigan congressman.

"The markets have remained futures-free since that time," said Wayne Mininger, executive vice-president at the National Onion Association.

Onions are highly perishable. Unlike corn or crude oil, they are not easily stored when markets are weak. Farmers delivering railway wagons full of onions against the futures contract at the Chicago Mercantile Exchange occasionally saw prices collapse, and in their frustration persuaded Congress to outlaw futures linked to the eye-watering vegetable. The lack of derivatives has not halted onion production, as the US grew 7.5bn pounds worth USD 844m last year, according to the agriculture department. The ban is supported by the onion association.

But as US commodity regulators ponder stiffer rules on speculation in oil and other futures markets, advocates of a hands-off approach point to onions as a cautionary tale, arguing the lack of exchange trading contributes to excessive volatility. Wholesale onion prices fell a quarter last year after more than doubling in 2008."

09-22-2010, 10:37 AM	#7 (permalink)
thekremlin Don't call me Shirley Join Date: Jun 2010 Location: London Posts: 3,271 Internets: 220249	Interesting article Onion Farmers, Hollywood Futures and the Law - NYTimes.com Background, quoted from someone on some food forum where people complain about the prices for vegetables. (I need better references) "Just fyi on onion prices. Interesting history. There is no futures market on onions to keep prices somewhat stable. The onion derivatives ban, however, would continue one of the most unlikely elements of US legislation - a 1958 crackdown on onion futures engineered by a future Republican president, Gerald Ford, while he was a Michigan congressman. "The markets have remained futures-free since that time," said Wayne Mininger, executive vice-president at the National Onion Association. Onions are highly perishable. Unlike corn or crude oil, they are not easily stored when markets are weak. Farmers delivering railway wagons full of onions against the futures contract at the Chicago Mercantile Exchange occasionally saw prices collapse, and in their frustration persuaded Congress to outlaw futures linked to the eye-watering vegetable. The lack of derivatives has not halted onion production, as the US grew 7.5bn pounds worth USD 844m last year, according to the agriculture department. The ban is supported by the onion association. But as US commodity regulators ponder stiffer rules on speculation in oil and other futures markets, advocates of a hands-off approach point to onions as a cautionary tale, arguing the lack of exchange trading contributes to excessive volatility. Wholesale onion prices fell a quarter last year after more than doubling in 2008."