Chicago Mercantile Exchange (CME), the world’s largest derivatives exchange at present, started as a small agricultural products exchange. Moreover, in its long history, it has also fallen into critical situations. The onion incident became famous in a crisis situation. CME listed onion as a commodity futures in the late 1940s. However, onion price soared as some traders bought up onion futures contract in 1957. Although onion farmers also bought futures in a speculative fever, soon onion price plummeted. Therefore, having made losses money by buying and selling physical onions and having made big losses on futures, onion farmers collectively pressed Congress to ban onion futures trading, and as a result, there is an episode where onion futures trading prohibition law was enacted next year. After that, although CME suffered from financial difficulties, the exchange managed to survive on transaction revenue of hen egg and lean hog.

Furthermore, as to the problem, some American economists have researched onion spot price volatility during the period when futures transactions were conducted and the period before and after it. A 1993 research verified that volatility of price after the ban of the futures trading was higher than before the ban and the research announced the conclusion that the futures market has the function to adjust and stabilize prices. The story sounds somewhat similar to the rice futures market that was disapproved in 2021. It is extremely difficult to manipulate prices in today’s systemized futures market. It is necessary to accurately convey those facts to the relevant parties.

（Futures Tribune・issued September 19, 2023 ・no.3240）