Lean Hog Prices Have Been Slaughtered, Not The Pigs

There's been a blood bath in the CME trading pit for lean hog futures.

The CME April futures contract for lean hogs settled at 40.225 cents per pound on April 3 (Friday) - the lowest closing level since late 2002, according to Reuters. The 31% decline in lean hog prices this week is the steepest one-week fall since 1979. The culprit once again was COVID-19. Many restaurants and food service companies have been shuttered as most states across the country are in lockdowns with stay-at-home orders. That translates into little demand.

And according to data from Excalibur Pro, don't expect things to get much better so lean hogs any time soon. Excalibur Pro uses the Markov Process to determine the probabilities of a financial instrument "changing states" - going from a bullish to bearish state or vice versa. The most recent data continues to show very strong bear signals.

In fact, if you go back to March 5, when lean hogs were trading at 65.375 cents, the Markov signals were indicating that the state for lean hogs was changing - the bear signals were beginning to get stronger. Even though the price of lean hogs was declining, it made a recovery to 66.425 on March 24. But the Markov signals were still indicating weakness. As they do today.