MetroTrade Monthly: What do Onions and Box Office Receipts Have in Common?

Seeing as its August, and even I’m tired of the no news cycle, I thought it would be fun to review the quirkier side of the industry. This is especially poignant because in 2010 federal regulators approved a futures contract, Congress banned it by name a few months later, and today the exact same underlying contract is trading briskly on two platforms our readers already know well. That’s not a hypothetical, it’s the actual life cycle of box office futures, and it’s as good a place as any to start a tour through some of the strangest products the derivatives industry has ever listed. Some of these are historical curiosities. One of them, it turns out, never really went away.

Onions: The Original Sin

Let’s start with the one every industry veteran already knows, because it’s the answer to a good trivia question: onions are the only commodity Congress has ever banned by name from futures trading, and the ban is still on the books today. The story behind it is a genuinely good one. In the fall of 1955, two traders named Sam Siegel and Vincent Kosuga cornered the onion futures market on the Chicago Mercantile Exchange, at one point controlling roughly 98% of the onions physically available in the city. They then reversed course, convinced growers to buy up their stored inventory by threatening to flood the market if they didn’t, built large short positions, and bottomed out the market by selling the same onions they’d been hoarding. Cash prices collapsed from roughly $2.75 to about a dime per fifty-pound bag in a matter of weeks. Congress held hearings, and freshman congressman Gerald Ford introduced the bill that became the Onion Futures Act of 1958. CME’s president at the time called the ban “burning down the barn to find a suspected rat”, sued to overturn it, and lost. Nobody has been legally allowed to trade an onion future in the United States since.

Butter, Onions, Pork Bellies: CME’s Revolving Door

The onion ban did real damage to CME’s business, and the way the exchange kept replacing its own top product is its own story. Onion futures had only become CME’s most heavily traded contract, accounting for roughly a fifth of all volume by 1955, because they had themselves replaced butter futures, which had ceased trading a decade earlier. With onions gone, the exchange spent much of the early 1960s hunting for a replacement and found one in a product almost as unglamorous: frozen pork bellies, the cut of pork used to make bacon. The contract launched in 1961 and eventually became CME’s signature product for decades, and the exact commodity Eddie Murphy and Dan Aykroyd’s characters famously corner in Trading Places. The contract lasted as long as the seasonal storage economics that justified it. Once cold-chain logistics and year-round bacon production eliminated the swings between frozen-inventory season and fresh demand, volume dried up, and CME delisted frozen pork belly futures and options effective July 18, 2011, citing “a prolonged lack of trading volume” after fifty years on the board. A trader quoted at the time called it the end of the exchange’s “glamour market”.

The One Nobody’s Heard Of

Not every strange contract is a historical relic. Nonfat Dry Milk futures are still genuinely listed and genuinely obscure: priced in cents per metric ton, with each contract representing 20 tons of powdered milk, and trading volumes so thin that most people in the industry, including plenty of longtime derivatives professionals, have never heard of the product at all. It’s a useful reminder that “weird” isn’t only a historical category.

Box Office Futures: Approved, Then Banned, By Name

Which brings us back to the opening. In the spring of 2010, two separate firms, Cantor Fitzgerald’s Cantor Exchange and a rival called the Trend Exchange, won CFTC approval to list futures contracts on domestic box office receipts, essentially allowing anyone to bet on how much a given movie would gross in its first few weeks. The Cantor vote was close, 3 to 2, with the commission finding that box office receipts met the legal definition of a commodity and that the contracts weren’t especially vulnerable to manipulation. The reaction from Hollywood was immediate and well organized. A coalition led by the Motion Picture Association of America and the Directors Guild of America lobbied Capitol Hill directly, warning that a limited release could be “ruined by futures pricing that casts them in a false light of a failed opening”. Congress agreed, and rather than write a new statute, lawmakers simply amended the 1958 Onion Futures Act to add a second banned commodity by name: motion picture box office receipts. Box office futures became the second, and to date the only other, product Congress has ever prohibited by name, sharing a single sentence of federal law with onions.

The Twist: It’s Back, Just Relabeled

Here’s the part that makes this more than a history lesson. The 2010 ban applies specifically to futures contracts on box office receipts. It says nothing about event contracts, and event contracts are exactly what Kalshi and Polymarket now offer. Right now, Polymarket runs dozens of active box office markets, with traders taking yes-or-no positions on questions like which film will be the year’s highest grosser or what a specific title’s opening weekend will bring in. Kalshi runs its own version of the same category, covering box office results, reviews, and awards outcomes. Functionally, this is the identical product Congress voted to ban fifteen years ago: real money, real odds, resolved against the same publicly reported box office data. The only thing that changed is the legal wrapper. Futures became event contracts, and event contracts, as regular readers of this newsletter know from our look at the space last year, currently occupy a far friendlier corner of the regulatory map than futures on a named, banned commodity ever could.

It’s worth sitting with that for a second. Congress didn’t eliminate demand for a way to bet on movie grosses, it just moved the product to a different shelf, one that didn’t exist as a meaningful venue back in 2010. Onions never got a second act, mostly because nobody has built a booming consumer platform around predicting vegetable prices. Box office receipts did, because it turns out people like speculating on movies more than they like speculating on onions, and the market eventually found a structure Congress hadn’t thought to name.

Closing

None of this is really about onions, bacon, or milk powder. It’s about the fact that the industry keeps rediscovering the same lesson: you can regulate a product, a venue, or a name, but the underlying appetite for price discovery and speculation tends to route around whatever obstacle gets put in front of it, sooner or later, under some new label. We’ve written before about how that same dynamic is playing out today with event contracts more broadly, and about the regulatory tug-of-war shaping the space (just look at perpetuals, for reference). The weirdest futures contracts in history aren’t just trivia. They’re a pretty good preview of where the next fight is likely to land.