There's no speculation about onions
http://www.chron.com/disp/story.mpl/business/steff [2008-7-31]
Tag : onions
Onions are a wild ride, and Texas farmers like it that way.
Last year, prices soared about 400 percent, to $60 for a 50-poundbag, and by this year, they'd fallen to $4, according to farmerswho grow onions in the Winter Garden region, the agriculturaltriangle from San Antonio to Laredo to Uvalde.
Onions are the only commodity in which futures trading isprohibited by federal law. Congress intervened 50 years ago to shutdown onion trading after farmers, particularly in the Midwest,became convinced that traders were to blame for falling prices.
Without speculation, onions also offer a glimpse of what acommodity market can be like without the trading of futurescontracts to smooth volatility.
Just last week, a federal task force set up to determine the causeof surging commodity prices, especially crude oil, concludedspeculation wasn't to blame. Rather, it found that "fundamentalsupply and demand factors provide the best explanation for therecent crude oil price increases."
Onions, of course, aren't oil. The markets are fundamentallydifferent because onion supplies vary with each growing season. Oilsupply is a persistent question, hidden by the cloak of state-ownedoil companies that refuse to give accurate assessments of theirreserves.
Onions are a wild ride, and Texas farmers like it that way.
Last year, prices soared about 400 percent, to $60 for a 50-poundbag, and by this year, they'd fallen to $4, according to farmerswho grow onions in the Winter Garden region, the agriculturaltriangle from San Antonio to Laredo to Uvalde.
Onions are the only commodity in which futures trading isprohibited by federal law. Congress intervened 50 years ago to shutdown onion trading after farmers, particularly in the Midwest,became convinced that traders were to blame for falling prices.
Without speculation, onions also offer a glimpse of what acommodity market can be like without the trading of futurescontracts to smooth volatility.
Just last week, a federal task force set up to determine the causeof surging commodity prices, especially crude oil, concludedspeculation wasn't to blame. Rather, it found that "fundamentalsupply and demand factors provide the best explanation for therecent crude oil price increases."
Onions, of course, aren't oil. The markets are fundamentallydifferent because onion supplies vary with each growing season. Oilsupply is a persistent question, hidden by the cloak of state-ownedoil companies that refuse to give accurate assessments of theirreserves.
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