San Francisco Onion Futures Company
A new company is offering private, transferable contracts for the future physical delivery of yellow onions, deftly navigating the decades-old US Onion Futures Act. This quirky venture sparks discussion on legal loopholes, the nature of commodities trading, and whether it's an art project or a serious, albeit niche, market. Hacker News finds humor and intrigue in its audacious approach to a very specific law.
The Lowdown
The San Francisco Onion Futures Company presents a unique proposition: private, transferable contracts for the future physical delivery of yellow onions. This endeavor immediately draws attention for its bold challenge to the 1958 Onion Futures Act, which largely banned the trading of onion futures on organized exchanges in the US.
Key aspects of their operation include:
- Legal Rationale: The company explicitly states it's not a 'board of trade' or 'organized exchange,' selling contracts privately and not operating a secondary market, which they believe skirts the federal prohibition.
- Delivery Logistics: Delivery is arranged in the first week of the contract month, with primary delivery areas in San Francisco, Toronto, Seattle, and Chicago. Third-party partners handle deliveries outside these zones.
- Pricing Mechanism: Contract prices are recalculated daily using a proprietary algorithm, with current prices surprisingly high for individual onions.
- Contract Transferability: Each contract comes with a unique key, allowing private resale or transfer. The new owner can update delivery information, voiding the old key and ensuring privacy.
- No Refunds: The company has a strict 'no refunds' policy, even for failed deliveries, advising contract holders to resell their keys if delivery isn't desired.
While the proprietor confirms it's primarily a 'novelty/art thing,' they genuinely deliver the onions. This peculiar blend of financial instrument, legal maneuvering, and performance art makes the San Francisco Onion Futures Company a fascinating, if unconventional, player in the world of futures contracts.
The Gossip
Legal Loopholes & Legislative Lore
The primary discussion point revolves around the legality of the San Francisco Onion Futures Company's operations, particularly its attempt to circumvent the 1958 Onion Futures Act. Commenters delved into the historical context of the act, noting its origin from market manipulation by Vincent Kosuga. The company's argument that it's not a 'board of trade' or 'organized exchange' is scrutinized, with some finding it a clever interpretation and others questioning its long-term viability, while the proprietor clarifies their legal stance as selling private, individual contracts.
Per-Onion Pricing & Supply Strain
A significant portion of the comments focused on the seemingly exorbitant price of the onion futures, which are confirmed by the proprietor to be 'per (normal yellow) onion.' Users expressed surprise and amusement at costs reaching up to $9.39 for a single onion, joking about the 'outrageous' nature of these prices for a basic vegetable. The disparity in pricing between different delivery months (e.g., November being significantly cheaper) also piqued curiosity.
Performance Art or Profitable Play?
Many commenters pondered the true nature of the San Francisco Onion Futures Company, speculating whether it's a serious business, a legal challenge, or an elaborate piece of performance art. Links were made to a student organization at UChicago and Northwestern campaigning for onion futures legalization. The proprietor chimed in to clarify that while they conceived the idea independently, they now collaborate with the student group for Chicago deliveries and explicitly stated the venture is 'primarily a novelty/art thing' while genuinely fulfilling deliveries.