Why It Is Illegal To Trade Onions In The US Commodity Markets
Due to a mischievous trader, onions are banned from being traded in the futures market in the USA
It was the Chicago Mercantile Exchange in 1955. Onion futures were selling at the low price of 10 cents each, even cheaper than the bags that held the onions.
At the same time, one man made a massive fortune from this price drop. The incident led to the US Congress passing a law that banned onion trading.
The Farmer to Trader
Vincent Kosuga was a farmer who grew onions and lettuce. He tried his hands at commodity trading but almost lost his fortune and returned to farming.
In 1955 after making some profit as a farmer, he returned to the Chicago Mercantile Exchange and traded Onion futures. Futures are trades where a buyer promises a seller that he will buy a product on a future date, but the buyer and seller fix the price now. Kosuga and his friends hatched a plan to utilize a loophole in the trading rules.
