Lean Hogs - Revisited

Back in early April, we looked at what the Markov Process on Excalibur Pro was telling us about lean hogs - and the signal wasn't very positive. At that time (April 4 to be exact), lean hog futures were trading at 40.255 cents per pound. Within days, they dropped below 30. They later recovered and traded as high as 68 in mid-May before sinking back to where they closed on June 5 (47.45).

Some market prognosticators quoted by Reuters looked at the U.S. jobs report on June 5 and declared that the economy was coming back more quickly than expected and that meant restaurants would open more quickly and that meant meat demand would return.

So, we thought it was worth seeing what the Markov signals are saying today. They had been somewhat bullish last week but slipped toward the end of the week. The futures price slipped below its 50-day moving average on Monday and continued to move lower. The RSI for lean hogs is a tad above a value of 30, which would signal oversold.

All signs seem to indicate some room to move lower before prices move higher.