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The Onion Futures Act

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Re: The Onion Futures Act

#11

Post by jpatokal »

zem wrote: post #10

as an indian, this bit was particularly fascinating: > The bill was unpopular among traders, some of whom argued that onion shortages were not a crucial issue since they were used as a condiment rather than a staple food. in india, onions are so vital a staple that the onion price is a major economic index. see https://economictimes.indiatimes.com/markets/commodities/new... for instance.

Onions are pretty fundamental to Western cooking as well, but they're not a staple in the sense that people will starve if they're unavailable, the way potatoes or wheat are.

Re: The Onion Futures Act

#12

Post by jpatokal »

fatnoah wrote: post #9

>This led to the emergence of new leadership who pioneered a different strategy, expanding the exchange's traded products to include futures contracts on pork bellies and frozen concentrate orange juice ...and we all know what happened to the FCOJ market in 1983.

If this didn't ring a bell: https://en.wikipedia.org/wiki/Trading_Places

Re: The Onion Futures Act

#14

Post by protomyth »

lordnacho wrote: post #8

You have to wonder why the lawmakers didn't use the same logic on all other products. Or at least ags. Corners happened again later, famously on silver with the Hunt brothers.

Because most ags, particularly the farmers themselves, started hedging their own crops to make sure they had some predictability. Futures are an important tool these days.

Re: The Onion Futures Act

#16

Post by elliekelly »

21 wrote: post #13

Laws should have an expiration date. Otherwise in 100 years there will be 1 million laws.

Agreed. Massachusetts still has a law on the books that says a contract entered into by a woman is presumed valid even if her husband didn't know about it.

Progressive at the time but kind of disgusting that no one has thought to strike it from the books in the past 50 years.

Re: The Onion Futures Act

#17

Post by Faaak »

pwaivers wrote: post #7

Another interesting topic in the derivatives markets: https://en.wikipedia.org/wiki/Weather_derivative . Basically you buy futures or options on the temperature, rainfall, and cloud cover. Super interesting!

We used this at work while hedging our electricity portfolio during last summer (we weren't covered 100%). It's a nice insurance that doesn't need a reason to pay off (if the threshold is met, it's payed). Very useful indeed for some specific applications.

Re: The Onion Futures Act

#18

Post by gammateam »

Matticus_Rex wrote: post #3

"In the 2000s (decade), onion prices were significantly more volatile than corn or oil prices. This volatility led the son of a farmer who initially lobbied for the ban to advocate a return to onion futures trading." This is the important part -- ag futures are insurance for farmers. You don't have to get it, but it limits your downside when you do, which is extremely important in low-margin, capital-intensive indust…

You can squeeze repeals like these into Budget Appropriation Acts to avoid government shutdowns

If you want. Better and faster than the popular vote for different representatives, you dont even have to be registered anywhere.

The US Federal Government doesnt have single item veto, and Congress wont care to revisit this even if they noticed later.

Re: The Onion Futures Act

#20

Post by anitil »

wcfields wrote: post #2

Planet Money podcast a covered this topic a few months ago: https://www.npr.org/sections/money/2015/10/14/448718171/epis...

Such a good episode!

Planet Money is so good that I've worked my way through 10 years of back-episodes over the last year or so, it's one of few podcasts which is worth doing that.

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