COMMODITIES: The Onion Boom

In the world of commodity markets, where millions of eggs are traded every day, few traders had time for onions. Not until 1942 was the onion even listed on Chicago’s big, bustling Mercantile Exchange, and there was so little interest (a mere 600 carlots traded v. 19,000 carlots of eggs) that it was subsequently dropped.

But last week the lowly onion was back with a rush; it was the hottest commodity* on the exchange and had pushed aside such heavily traded commodities as butter & eggs. Hour after hour, shirtsleeved brokers bid high & fast fof November futures, sending the price of a 50-lb. sack up as much as 50¢ in a day (the maximum permitted). More onions would be traded this month, experts estimated, than in all of 1948, when a record 21,214 carlots changed hands.

What started the onion boom was a Government forecast of a short crop—27.2 million sacks v. 31.6 million last year—and a trader’s hunch that the Govrnment forecast was too high. As he started to buy, traders who were caught napping two years ago when a short crop swept the price up from $3.80 to $6.50 jumped in too.

From $1.90 in early August the price soared to $3.93 on Sept. i, then slipped off to $2.69. Last week it bounced back up under brisk bidding to $3.25. Nor was the end of the boom in sight. Onions usually start coming into the market for delivery n November. But if the price is rising, and the crop short, many a farmer will probably hold out his onions and the short sellers scurry to cover their sales. Commented a trader happily: “That’s when prices will really begin to go up.”

* The exchange handles only yellow globe and weet Spanish onions.