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July 15th - According to sources, AI-powered cloud computing company Coreweave (CRWV.O) is exploring the use of financial derivatives as a potential hedge against future price declines in memory and storage chips. This unusual move highlights how the AI boom is deeply entangled cloud service providers with the volatile chip market. To lock in supply, cloud operators, including Coreweave, have signed long-term agreements with memory and storage chip manufacturers such as Micron and SanDisk. Many of these agreements provide suppliers with a price floor guarantee for DRAM and storage chips. However, this arrangement is a double-edged sword; while it protects chip manufacturers from market downturns, it also exposes cloud service companies like Coreweave to risk. If prices fall, they will be forced to continue purchasing at prices far above market value. Therefore, Coreweave executives have discussed how to hedge against the potential devaluation of memory chip inventory due to future price declines. The discussions are in the early stages, and the company has not yet implemented any hedging operations. The proposed solutions include put options and other possible derivatives.On July 15th, Futures News reported that soybean oil futures on the Chicago Board of Trade (CBOT) closed lower on Tuesday, with the benchmark contract down 0.7%, mainly reflecting the unwinding of oil-meal arbitrage. Traders said the unwinding of the soybean oil-sell-soybean-meal arbitrage put pressure on the soybean oil market. Improved conditions for the U.S. soybean crop and the potential easing of high temperatures in the Midwest next week also weighed on the soybean and soybean oil markets. However, stronger international crude oil futures limited the downside for soybean oil. The National Oilseed Processors Association (NOPA) will release its monthly crush report on Thursday. Analysts on average expect NOPA member companies soybean oil stocks to reach 1.653 billion pounds in June, down from 1.735 billion pounds at the end of May, but higher than the 1.384 billion pounds projected for the end of June 2025.Japans core machinery orders fell 12.4% month-on-month in May, compared with an expected decline of 4.2% and a previous reading of 8.70%.Japans core machinery orders fell 1.9% year-on-year in May, compared to a forecast of 12.90% and a previous reading of 15.60%.Sources say Coreweave (CRWV.O) is exploring the use of financial derivatives to hedge against the risk of future declines in memory chip prices.

Rabobank forecasts that USD/JPY will hit 135 before readjusting to the 132-130 region later in the year

Daniel Rogers

Jun 13, 2022 15:34

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Inflation rates in the United States exceeded all forecasts. Rabobank economists anticipate that the USD/JPY pair will rise to 135 in the near future before falling to the area of 132-30 later in 2022.

USD/JPY is largely dependent on the forecast for US rates

The strength of the US inflation report for May raises the prospect for further USD/JPY rises over the next one to three months to 135. This presupposes that the Bank of Japan will retain its present loose monetary policy at its June meeting, which looks quite probable."

 

"We continue to be skeptical about the prospect of genuine FX intervention, since this would directly contradict the BoJ's monetary policy." It would also violate the commitment Japan has maintained for years as a member of the G7 to let the market determine currency rates."

 

We anticipate that lower US rates will let USD/JPY to return to the range between 132 and 130 later in the year.

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