CHICAGO (B)--Oct. 20 U.S. Department of Agriculture monthly cold storage report showed a modern record total frozen pork supply of 439.325 million pounds as of Sept. 30. Frozen pork belly storage stood at 21.341 million pounds, indicating better-than-expected movement of frozen bellies out of non-Chicago Mercantile Exchange storage facilities. Hams stored at the end of September also were at record levels in modern historical terms with 147.354 million pounds frozen.

Chuck Levitt, analyst with Alaron Trading Corp., said the total pork figure for the end of September at 439.325 million pounds meant that packers would not be fighting each other for hogs in coming weeks. He saw the modern record supplies of hams as especially bothersome because stocks were 10.0 million pounds more than projections. However, he viewed the belly number as bullish.

"It is a good news-bad news report, with the belly figure the good news and hams and total pork stocks negative numbers," said Levitt.

He predicted pork belly futures would open 50 points higher, while hogs would slide 25 to 50 points on the hams and total stocks data. Still, he said the belly figure was slightly more than at this time in 1999 and the largest since 1992.

"The ham number would be more bearish but for the low turkey stocks, which will dampen the impact," Levitt said.

However, with supplies of live hogs also projected to increase in coming weeks, he expected a weaker hog futures opening.

Dale Benson of Crystal River Capital agreed with Levitt that the combination of large ham stocks and seasonally increasing hog kills would have a negative effect on futures. Benson also concurred that belly futures would be boosted by the strong usage of frozen bellies.

"Two-for-one retail bacon features during September finally moved product," he said.

He saw an increase in beef cuts as a bullish rather than a bearish sign. He said beef packers were expecting higher prices and stored product to take advantage of the profitable rise.

Dan Vaught of AG Edwards and Sons took a less bearish view of the heavy frozen ham holdings. Vaught said the large ham storage figure was a conscious response to expectations for low whole turkey stocks for the holidays. Indeed, the fewer turkey stocks have been a well-known fact for many months and the ham buildup may be in response to forward commitments for product.

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