Computing power is going the way of oil in markets 

WHAT is the difference between an egg and a computer chip? There are several answers, but an important financial one is that recent fundamental market changes have been much more disruptive for egg buyers than computer-processing users. Avian flu has caused egg prices to oscillate from less than US$1.50 a dozen to more than US$8 in the Midwest and has at times resulted in the disappearance of eggs from supermarket coolers and the bankruptcy of large producers. Now consider what happened with the price of computing services when China’s DeepSeek unveiled an artificial intelligence (AI) model, developed on the cheap, that caused the largest single-day decline in the market capitalisation of any stock – more than twice the previous record: Prices barely moved and there were no bankruptcies.

It was a sign that the sophisticated financial infrastructure insulating computing services – but not eggs – from price shocks is growing and innovating rapidly and could represent a significant emerging opportunity. It was also a reminder of how quickly the narrative around AI demand for processing power can shift, reviving interest in futures markets for computing services, a dream people have pursued since 1989.

One of the purposes of futures markets is to draw financial investors into the production process of commodities. Institutional investors can provide cheap, patient capital by rolling futures contracts – going long the nearest delivery month, short future months, and moving the position forward every month. This allows producers, processors and distributors to operate with less capital, meaning lower costs and less disruption to real economic activity from financial shocks. There aren’t any egg futures, and only 5 per cent of eggs trade on a specialised spot market, the Egg Clearinghouse. This is an important reason for the wild price swings and market dislocations.