Although Chicago is named after an onion, it's been illegal to trade onion futures since 1958 when Congress outlawed onion futures after a couple speculators cornered the market. The Onion Futures Act was passed a few years after the manipulation of contracts in late 1958 and to this day onions are the only physical commodity in which futures trading is prohibited on in the US. At the time of the ban, onion futures represented 20% of exchange volume at the CME and the loss of such a flagship contract helped drive the continued innovation which the exchange pursues to this current day.
To get a sense of the manipulation, prices moved from $2.75 a 50-lb bag in August 1955 down to only 10 cents by March 1956. However as seen from the chart below that was published in the FT, onion prices continued to have boom-bust volatility even after the Onion Futures Act was enacted. The second chart illustrates the price of wheat traded in Berlin to show similar volatility when the German government banned wheat futures trading in 1897.
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"Today onions are the only commodity for which futures trading is banned. Not coincidentally, onion prices remain extremely volatile: they doubled in 2008, and then fell by 25 percent in 2009."
As far as the final word on government's overstepping regulation, I'll leave it to the 2 Live Crew's song Banned in the USA.
(Offtopic, but is it odd that compared to today's ignorant rappers I find the 2 Live Crew to be a relative paragon of intelligence)
