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August 2019 bids adieu to pizza brands ... with a kiss, especially for Papa John's

The final week of August was a relatively glorious one for most pizza brands, with all major pizza restaurant commodity prices on the wane, while stock values were on the upswing across the board.

September 3, 2019 by S.A. Whitehead — Food Editor, Net World Media Group

Pizza company leaders might have shed a tear or two for the last days of August, after all watched their stock values increase as the month wrapped up last week, though none so much as Papa John's. The Louisville-based brand saw a nice spike at the end of the week, perhaps indicating investors' approval of former Arby's turnaround chief, Rob Lynch, as the chain's new president and CEO. 

Cheese — 'Football effect' in full swing

At the Chicago Mercantile Exchange last Friday, barrels closed at $1.74, while 40-pound blocks ended the week at $1.93. The weekly average for barrels and blocks was relatively flat, with barrels averaging  $1.69 and blocks averaging $1.90, according to the U.S.D.A. Market News Service. 

Cheese production schedules in much of the country are at or near capacity, with strong demand in the West and Midwest, along with gradually improving demand for the commodity in the Northeast. As a result, Midwest manufacturers are reported to be pushing back some cheese shipment dates, while inventories are being reduced in the West and there is a good supply available to fill contracts in the Northeast. 

Prices quoted by the U.S.D.A. for 5-6 pounds lots of mozzarella ranged from $2.07 to $3.01. In the West, cheese markers report that not only is demand strong, but that U.S. cheese market prices have been well above international cheese prices for some time, making excursions into export markets more challenging. 

The uptick was attributed to the uptick in pizza consumption fueled by the upcoming football season, the modest tightening of cheese stocks and increased food service needs of schools — all prompting buyer activity. 

Wheat prices on the wane

Cash bids for wheat were mixed, ranging from 12 cents lower to 3 cents higher in trading last week. Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 3 3/4 cents lower, from $4.74 1/2-$4.84 1/2 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 2 to 3 cents higher, from $4.71-$4.72 per bushel.  Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was 12 cents lower at $5.86 1/2 per bushel. Portland U.S. Soft White wheat rail was steady from $5.55-$5.75 per bushel.

Auto fuel prices remain rosy

With gas demand reported to be very strong nationally, the U.S. Energy Information Administration reported that gasoline stocks fell by 2.1 million bbl to total at 231.9 million bbl. Still, according to the American Automobile Association, though demand is chipping away at supply, it's not at a high enough rate to significantly impact gas prices. 

In fact, the national average price for gas is running lower, week over week, which likely was a boost for pizza restaurateurs with strong delivery demand over the Labor Day weekend. The current average price for a gallon of regular nationally is $2.57, which is not only 2 cents lower than a week earlier, but a hefty 15 cents under what we paid just a month earlier and 26 cents lower than a year ago at this time. 

That same trend continue across grades with mid-grade today averaging $2.91 and premium at $3.17 a gallon. At $2.93 a gallon, diesel is, however flat with the price paid for that fuel a week ago and just 6 cents lower than a month ago. Finally, E85 averaged $2.28 a gallon today, which is 2 cents lower than last week and 10 cents under the rate paid a month earlier. 

Natural gas prices drop

Natural gas spot prices fell at most locations for the last week of results reported by the U.S. Energy Information Administration, ending on Aug. 28. Henry Hub spot prices also dropped slightly from $2.25 per million British thermal units (MMBtu) to $2.24/MMBtu over the same seven days.

At the New York Mercantile Exchange, the September 2019 contract expired at $2.25/MMBtu, up 8 cents/MMBtu from the previous week. The October 2019 contract increased to $2.22/MMBtu, up 4 cents/MMBtu. The price of the 12-month strip averaging October 2019 through September 2020 futures contracts climbed 3 cents/MMBtu to $2.373/MMBtu.

Net injections to working gas totaled 60 billion cubic feet (Bcf) for the seven days ending Aug. 23. Working natural gas stocks are 2,857 Bcf, which is 15% more than the year-ago level and 3% lower than the five-year (2014-18) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 27 cents/MMBtu, averaging $4.37/MMBtu for the week ending Aug. 28. The price of natural gasoline fell by 2%. The prices of ethane, butane, isobutane and propane, rose by 16%, 13%, 10% and 5%, respectively.

According to Baker Hughes, for the week ending Tuesday, Aug. 20, the natural gas rig count decreased by three to 162. The number of oil-directed rigs fell by 16 to 754. The total rig count decreased by 19, and it now stands at 916.

Major U.S. pizza brand stocks

As previously mentioned, Papa John's stock got a huge boost last week, bouncing up in value from $43.06 a week earlier to $49.76 at the close on Friday. But, the brand wasn't alone in seeing its stock value grow over the final days of August, with Domino's seeing a slight lift in value of about 69 cents over the week, ending Friday at $226.84. Meanwhile, Pizza Hut parent, Yum Brands also got a nice lift from $115.31 a week earlier, to $116.78 at the close on Friday. 

Photo: iStock 

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.