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Why Onions Are One Of The Only Trading Commodities Banned In The United States

After two men manipulated the market to make a fortune off onion futures in Chicago, the vegetable was made off limits for future commodity trading

Andrew Martin
4 min readOct 15, 2022

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When it comes to investing, those looking to make a profit are willing to trade just about anything. Stocks and commodities are two of the most prevalent asset types that receive investment dollars. Surprisingly, the one of the only commodities explicitly banned from trading in the United States is onions, which occurred in the 1950s after a short-selling scheme nearly collapsed the market and brought farmers to ruin.

The great onion financial debacle occurred in 1955 when two men named Vincent Kosuga and Sam Seigel devised a plan for making a fortune off of onion futures. Futures are when investors can purchase a commodity to be received at some point in the future for a price set at the present moment. Investors participate in this, as they are hoping that the price of their commodity will have increased by the time they come into possession of them — thus guaranteeing a profit.

How Kosuga and Seigel took advantage of this was that they noticed that in 1955 onion futures were the most heavily traded commodity on the Chicago Mercantile Exchange — with those transactions making up a whopping 20% of all trades. That Fall, seeing significant opportunity, they bought up as many onions and onion futures as they could get their hands on — to the point that they controlled around 30 million pounds, or 98% of all onions in the Chicago area.

Once they had the onions and futures firmly in their grasp, the two men began short selling their futures, essentially betting that the price of onions would drop. Since they had such control over the market, it wasn’t so much a bet as it was a certainty, since their huge market share made them able to control the price.

Combined with the short selling, Kosuga and Seigel began telling growers they needed to buy their produce back from them or they would start flooding the market with their onions. As the growers bought more and more to try and avoid being financially destroyed, the two investors continued buying short…

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Andrew Martin

Dabbler in history, investing & writing. Master’s degree in baseball history. Passionate about history, diversity, culture, sports, investing and crypto.