Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 8/24/09

USDA released its monthly Cold Storage report on Friday, reflecting a disconcerting buildup in pork stocks, particularly hams.

USDA reported total pork in cold storage on July 31 at 547.3 million pounds, up 8.3 percent from a year ago and near 25 percent above the five-year average, according to analysts reviewing the report.

Ham stocks in cold storage, at 137.8 million pounds, came in 5 percent below a year ago due to revisions in year-ago numbers, but stood at nearly 24 percent above the five-year average.

"Ham prices normally help carry hog carcass values in Q4 but with such an increase in ham stocks, demand in Q4 could be softer than usual and negatively impact overall pork values," Paragon Economics President Steve Meyer wrote in the CME Group Daily Livestock Report.

J.P. Morgan analyst Ken Goldman agreed. "The amount of pork in storage is not unmanageable, but it remains significantly higher than its five-year average, which bodes ill for prices," he wrote in a note to investors.

Goldman called the report neutral for Tyson Foods, which would actually benefit from a compressed spread between hog and pork prices; but bad news for Smithfield Foods, because of its hog-raising operations.

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