Article

A pizza operator's week to pout as brand values fall, cheese prices rise

It's a good thing pizza operators got to spend some time with dear ol' mom Sunday after investors left the four major publicly traded brand needing a consoling hug or two.

May 13, 2019

It was a pretty dismal week for the four major publicly traded pizza brands monitored weekly by this website, with all losing value over the five days before Mother's Day weekend. There was some relief though for pizza restaurateurs from lower wheat and slightly reduced delivery vehicle fuel prices, but nothing to write ol' mom at home about. 

Cheese 

Barrels closed at $1.71 and 40-pound blocks finished Friday at $1.68. The weekly average for barrels was up 9 cents to $1.72, while blocks were 3 cents higher on average at $1.70. There was a noteworthy drop-off in spot milk accessibility year over year, with spot milk prices reported from $1 over to $1.50 under Class, which is significantly pricier than in the previous two years of reported spot prices, according to the U.S.D.A. Agricultural Marketing Service. 

Cheese production is active nationwide, as stocks continue to grow. Cheese market tones are generally healthy with busy trading on the Chicago Mercantile Exchange as barrels have caught their bullish stride. 

Wheat

Compared to last week, cash bids for wheat were mostly lower, while export sales for the seven days ending May 2 totaled 3.3 million bushels of wheat. Wheat was 23 1/2 cents lower to 15 cents higher, with Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid at 4 1/4 cents lower from $5.12 3/4-$5.22 3/4 per bushel.  Kansas City U.S. No. 2 Soft Red winter rail bid was not quoted.  

St. Louis truck U.S. No. 2 Soft Red Winter terminal bid was 6 to 15 cents lower at $4.59 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was 23 1/2 cents lower at $5.97 1/4 per bushel. Portland U.S. Soft White wheat rail was 5 cents lower to 15 cents higher, from $5.75-$5.85 per bushel.

Vehicle fuel 

The U.S. Energy Information Administration said crude stocks fell by 4 million barrels to 466.6 million barrels last week. While the new level is still 32.8 million barrels lower than at this time last year, the step back is a reversal from the previous week that saw crude inventories climb. 

Contributing to the recent reduction in total domestic crude inventories was a slight reduction in domestic crude production and a drop in crude imports, even as crude exports fell last week. The American Automobile Association said that if total crude stocks continue to tighten, American motorists will likely see pump prices continue to increase.

But this morning, they were falling, with the average price of a gallon of regular unleaded dropping 4 cents from last week's average of $2.90, to come in at about $2.86 today, which is even a penny less per gallon that last year at this time. That same trend held out throughout the grades with mid-grade averaging $3.18 and premium at $3.44. Lastly, diesel was down a significant 6 cents from last week at $3.10 and E85 averaged 3 cents lower than last week at $2.42.

Natural gas

Natural gas spot price movements were mixed for the seven days ending May 8, with Henry Hub spot prices falling from $2.62 per million British thermal units (MMBtu) to $2.59/MMBtu over that period. At the New York Mercantile Exchange, the price of the June 2019 contract decreased 1 cent, from $2.62/MMBtu to $2.61/MMBtu over that period. The price of the 12-month strip, averaging June 2019 through May 2020 futures contracts, remained the same at $2.746/MMBtu.

Net injections to working gas totaled 85 billion cubic feet (Bcf) for the week ending May 3. Working natural gas stocks are 1,547 Bcf, which is 9% more than the year-ago level and 16% lower than the five-year (2014-18) average for this week. The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 43 cents/MMBtu, averaging $5.69/MMBtu for the week ending May 8. The price of natural gasoline, ethane, propane, butane, and isobutane all fell, by 2%, 5%, 8%, 12%, and 13%, respectively.

According to Baker Hughes, for the week ending Tuesday, April 30, the natural gas rig count decreased by three to 183. The number of oil-directed rigs rose by tw to 807. The total rig count decreased by one, and it now stands at 990.

Pizza company stocks

It was a pretty lousy week for pizza brands beginning with Domino's Pizza Inc. where investors saw the brand lose $7.56 in value over the week, closig Friday at $272.19. Things weren't much better for competitor, Pizza Hut's parent company, Yum Brands, which lost $2.22 in value over trading last week to close Friday at $100.50. 

Continuing with that sorry song, Papa John's ended Friday at $51.80, down from $53.06 the previous Friday's close, and Papa Murphy's dropped 2 cents to close the week at $6.44.