San Francisco Onion Futures Company
A satirical-but-functional website selling “private, transferable contracts” for future onion delivery is testing the limits of a 1950s U.S. law that uniquely bans onion futures on regulated exchanges. Commenters parse the legal definitions of exchanges, futures, and forwards, debate whether this is clever free‑market activism or just performance art and price gouging, and revisit the historical market manipulation that led to the Onion Futures Act. Many note the novelty pricing, the lack of a real secondary market, and broader questions about how futures markets transfer risk and when commodity speculation becomes harmful.
Legal status and regulatory gray area
- Core question: does the site violate the Onion Futures Act, which bans onion futures on any “board of trade”?
- Defenders argue it’s not an “organized exchange” or “trading facility” under U.S. code because:
- All trades are directly with the site, not between multiple participants.
- There’s no matching engine or secondary market the site operates.
- Others counter that if it creates and backs tradable contracts, it looks functionally like an exchange or dealer despite the wording.
- Some characterize the legal defense as relying on a technical loophole and semantics (“private, transferable contracts” vs “futures”).
- Several note these are closer to forwards or simple pre-orders than standardized, regulated futures.
Economics of futures and volatility
- Linked references to the Onion Futures Act and data series for agricultural prices spur discussion about volatility.
- Debate over whether futures reduce volatility or merely “absorb” it by shifting risk from producers/consumers to speculators.
- Explanations:
- Futures let farmers and buyers trade price risk for predictability (hedging).
- Traders accept many such risks for a premium, hoping diversification protects them.
- Comparisons of onions vs tomatoes, lettuce, potatoes, corn, etc.:
- Storability and transportability are argued to smooth prices even without futures.
- Futures are said to have more visible impact where there are large, liquid markets.
Why onions were singled out historically
- Thread recalls 1950s market cornering that led to the ban; onion futures were once highly lucrative.
- Debate on why only onions were banned instead of all small, cornerable commodities.
- Some see this as an example of U.S. laws being very event-specific; others defend narrow laws as limiting collateral damage.
- Onions are described as a small, seasonal, semi-perishable market—big enough for futures, but easy to manipulate and not politically vital like wheat.
Nature of the project: art, activism, or business?
- Many view it as performance art / satire aimed at the Onion Futures Act and broader derivatives regulation.
- Others treat it as light “free-market activism,” pushing for legalization of onion futures.
- An associated student group campaigns for legal onion futures and distributes onions on campus.
Pricing, product details, and reactions
- Contracts are per individual yellow onion; size and weight are unspecified.
- Prices like ~$9/onion are widely noted as far above grocery levels, understood as novelty pricing.
- Some discuss arbitrage between months or jokingly propose shorting onions; the lack of built-in secondary market makes this impractical.
- Suggestions include tokenization, prediction markets, QR-based claim tickets, and even onion kiosks.
- Skeptics call it a rip-off or unserious; enthusiasts treat it as clever, funny, and “very good” internet art.
Humor and cultural references
- Thread is rich in puns and jokes (onion fungibility, Tor onion site, “Future’s Onion,” TV and film quotes).
- Users swap onion soup recipes and reminisce about other online onion sellers and related media (podcasts, essays).