\n\n"}\n\nSo I was talking to someone about livestock futures yesterday and I was like\u00a0\u201cI know you can get cattle futures and pork futures, but what about chicken? why shouldn\u2019t I be able to buy some chicken futures if I want to invest in chicken?\u201d
\nAnd I looked it up and it turns out people have tried to start a chicken futures market three different times! This was in the 60s, 80s, and 90s, and every time it failed.
\nApparently this is largely because in the cattle industry beef processors buy cattle from farmers, so there\u2019s demand for futures from people who want to hedge against price volatility. But the chicken industry is more vertically integrated, so no one actually needs to hedge with futures.
\nAlso I learned that in 1958 Congress passed a bill banning the sale of onion futures? It is still a misdemeanor that carries a fine of up to $5000, so be careful about that I guess.
\n(Of course there\u2019s also the question of whether a vegetarian can even buy chicken futures. But my vegan friend bought cattle futures the other day so I think it\u2019s generally considered acceptable.)
\n(Though now I am imagining animal rights groups campaigning for universities to be short livestock futures and it feels totally plausible. If you personally would like to be short livestock, there is a short livestock ETF that trades on the London Stock Exchange, but it does not seem very liquid and it might be hard to trade it if you are not British, idk. If you would like to be short chickens specifically, I recommend shorting the stock of poultry producers.)
\noh man do you not know the onion futures story
\nokay, so, it\u2019s the 1950s. there\u2019s an onion farmer named Vincent Kosuga. he\u2019s a pretty successful onion farmer, so he starts speculating in the commodities markets. after an initial disastrous flirtation with wheat futures, he finds a niche betting on onion prices \u2013 he is, after all, an onion farmer \u2013 and does pretty well for himself.
\nin 1955, Kosuga gets an idea. an awful idea. Kosuga gets a wonderful, awful idea. he starts building warehouses around the country, and places orders for all the onions he can get his hands on. in addition, he starts buying onion futures, guaranteeing him delivery of the onions that are still in the ground.
\nby that fall, he\u2019s done what he\u2019s set out to do. he owns 98% of the onions in the united states. he\u2019s cornered the market, and he gets to control onion prices. of course, since he has all the onions, he jacks prices up really high and makes a ton of money.
\nbut Kosuga isn\u2019t done yet. he\u2019s quietly been establishing a big short position in onion futures. then, all of a sudden, Kosuga starts flooding the market with all the onions he owns. onion prices go through the floor \u2013 literally selling for less than the cost of the bag they\u2019re delivered in. since Kosuga is short onions, he makes another\u00a0ton of money.
\nbut everyone is super pissed\u00a0at him. especially other onion farmers \u2013 when the price of onions got driven down to almost nothing, their crops, their hard work, became worthless. some of them went bankrupt, or even committed suicide. so of course they lobby congress. and congress, as always, legislates to prevent the previous crisis rather than the next one \u2013 and bans trading in onion futures.
\nof course, this is probably unnecessary and in fact harmful. it\u2019s really rare for anyone to come close to cornering the market in a commodity, and it\u2019s even harder today (you can\u2019t really buy up all the onions in secret, without other traders noticing) than it was 60 years ago. nevertheless, trading in onion futures remains illegal in the US today.
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