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Financial Times http://www.ft.com/cms/s/0/7ac169d8-4b3c-11df-a7ff-00144feab49a.html Bill to ban onions and movies derivatives By Gregory Meyer in New York Published: April 19 2010 05:11 | Last updated: April 19 2010 05:11 A financial reform bill being considered in the US Senate promises stricter supervision of all derivatives, but a ban on only two – futures based on cinema box-office receipts and the price of onions. The box-office futures prohibition is a response to recent efforts to create exchanges that would allow studios and speculators to hedge or wager on the risks of Hollywood releases. “The markets have remained futures-free since that time,” said Wayne Mininger, executive vice-president at the National Onion Association. Onions are highly perishable. Unlike corn or crude oil, they are not easily stored when markets are weak. Farmers delivering railway wagons full of onions against the futures contract at the Chicago Mercantile Exchange occasionally saw prices collapse, and in their frustration persuaded Congress to outlaw futures linked to the eye-watering vegetable. The lack of derivatives has not halted onion production, as the US grew 7.5bn pounds worth $844m last year, according to the agriculture department. The ban is supported by the onion association. But as US commodity regulators ponder stiffer rules on speculation in oil and other futures markets, advocates of a hands-off approach point to onions as a cautionary tale, arguing the lack of exchange trading contributes to excessive volatility. Wholesale onion prices fell a quarter last year after more than doubling in 2008. ________________________________________________ Send list submissions to: Marxism@lists.econ.utah.edu Set your options at: http://lists.econ.utah.edu/mailman/options/marxism/archive%40mail-archive.com
