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The Onion Futures Act

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Re: The Onion Futures Act

#71

Post by golergka »

benj111 wrote: post #68

There seems to have been some wider failures in the market here. The article states that prices rose elsewhere, whilst crashing in Chicago. Why did no one arbitrage. Why did the farmers feel pressured to buy the oversupply . Cornering the market like this /shouldn't/ have worked. I'm actually kind of surprised there isn't some law somewhere banning primary producers buying their own product. Think about a mine buying…

How do you differentiate between a producer and a consumer? What if a mine is bought by a vertically integrated company that both mines the ore and then processes is as well - and because of, say, some unpredicted difficulties in different parts of it business, has sometimes buy additional ore (to keep smelters running), and sometimes has to sell it because it mined too much?

Re: The Onion Futures Act

#72

Post by 0db532a0 »

andybak wrote: post #62
lazycouchpotato wrote: post #45

On a side note, I hovered the cursor over "Onion" and was surprised to find out it's classified as a fruit. https://en.wikipedia.org/wiki/Onion

"Intelligence is knowing tomatoes are a fruit. Wisdom is knowing not to put them in your fruit salad"

You will be interested to learn about the existence of tomato jam.

Re: The Onion Futures Act

#73

Post by benj111 »

golergka wrote: post #71
benj111 wrote: post #68

There seems to have been some wider failures in the market here. The article states that prices rose elsewhere, whilst crashing in Chicago. Why did no one arbitrage. Why did the farmers feel pressured to buy the oversupply . Cornering the market like this /shouldn't/ have worked. I'm actually kind of surprised there isn't some law somewhere banning primary producers buying their own product. Think about a mine buying…

How do you differentiate between a producer and a consumer? What if a mine is bought by a vertically integrated company that both mines the ore and then processes is as well - and because of, say, some unpredicted difficulties in different parts of it business, has sometimes buy additional ore (to keep smelters running), and sometimes has to sell it because it mined too much?

How do you differentiate between a patent troll and a company just trying to protect its IP? You do make a good point though.

I'm not suggesting the legislation would be a good idea, certainly not in the modern day. It just occurred to me that this would be an indicator of fraud, and from what I know about the history of publicly traded companies and the class of people who were investing in companies etc, I'm surprised this wasn't a law.

The article states that traders thought there was a glut because the onions were shipped out and back in again, in the 1950s. It would have been even easier 50-100 years earlier.

Re: The Onion Futures Act

#74

Post by smsm42 »

jedberg wrote: post #23
pfletcherhill wrote: post #5

The other notorious carve-out is box office futures. Read more about the ban here: https://www.theringer.com/movies/2018/11/15/18091620/box-off...

Interesting! I'd never heard of this. It look like their arguments against it are about the same as the arguments against variable pricing for movies -- the price would reflect overall sentiment and influence the viewership. Why would you go see a movie that is only $1. Clearly no one else wants to see it. In the same vein, why would you see a movie with a bunch of shorts on it?

I would go to see a movie for $1 without thinking much. If it's a good movie. If it's a bad one, I won't go seeing it even if I'm being paid (unless it's a lot of money). Now how to know if it's good or not is the question. But price is a rather bad signal for this - one has much better ones, like people involved in the production, trailers, reviews, recommendations of people you trust, etc. And it works reasonably well.

Re: The Onion Futures Act

#75

Post by mousebender »

lazycouchpotato wrote: post #45

On a side note, I hovered the cursor over "Onion" and was surprised to find out it's classified as a fruit. https://en.wikipedia.org/wiki/Onion

FYI, before a December 12 edit on Wikipedia, it was listed as a vegetable. Vandalism?

https://en.wikipedia.org/w/index.php?title=Onion&type=revisi...

Apparently a fruit is the ripened ovary of a flowering plant, enclosing the seed or seeds--not a bulb like an onion.

Re: The Onion Futures Act

#76

Post by mises »

This feels like something Rand Paul would dig up. It's pretty much the ultimate example of stupid, meaningless regulation. Gotta protect that crucial onion market. Definitely an enumerated power.

Re: The Onion Futures Act

#77

Post by ryan-allen »

F_r_k wrote: post #60
ryan-allen wrote: post #33

Earlier quoted context omitted.

This is an actual thing??!

If you don't understand it, why have you got an opinion of it ?

I don't have an opinion of it! I did search on the topic and found that it is indeed a thing, and the point of it is for farmers to hedge against bad weather. I don't understand it completely but it does seem to make sense in terms of stability. My ??! came across as indignant but it was honest! I watched a Khan video about how options improve stability also, it seems counter-intuitive but my grasp so far is that these instruments are good for stability and stability is important.

Re: The Onion Futures Act

#78

Post by mac01021 »

BlackFly wrote: post #70
andybak wrote: post #62

Earlier quoted context omitted.

"Intelligence is knowing tomatoes are a fruit. Wisdom is knowing not to put them in your fruit salad"

Unless you are talking botany, calling a tomato a fruit is falling for the fallacy of equivocation and too many people do this and have the pretension that they are being smart. The word "fruit" has multiple definitions, a tomato is a fruit by definition 1, but not a fruit by definition 2. What most people understand by the word fruit is definition 2.

What's definition 2?

Re: The Onion Futures Act

#79

Post by fujimotos »

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…

> ag futures are insurance for farmers

I know nothing about futures, but how does it work?

Insurance works because a loss happens to some individual, not to all members of the class of people at all once. So insurers can cover the specific loss with pooled money.

But if ag price falls, every farmer (that is, all members of the insurance buyers) suffers loss, right? Won't it just bankrupt the insurance providers?

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