Interesting historical story on cornering the onion market in 1955. The main culprit, Vince Kosuga, bought all the physical onions around the country as well as all the longs in the futures markets. He sold and made a killing. It didn’t end there…
Then he kills the competition a second time by bombing the markets with sell orders. Since he owned the physical, and the shorts control the market, he had all the onions physically delivered to Chicago, and that’s when all hell broke loose.
He didn’t break the law, but obviously acted unethically. The result: The Onion Futures Act which was proposed by then Michigan Congressman Gerald Ford (later President of the United States) and signed into law in August 1958 by President Eisenhower.
The ban on onion futures trading remains in tact today. The aftermath no price discovery, no transference of risk, AND an increase in price volatility in physical onion prices.
A report by Fortune magazine in 2008 showed the volatility in onion prices was significantly greater than those of physical corn or crude oil – two commodities that have liquid futures contracts.