Food & Beverage

Cheese, wheat, gas prices climb, as year's top pizza stocks fall

All the staple ingredients that pizza restaurant companies depend on were trending up in price last week, indicating the industry's increasing pace forward on the path to more normal operations. Still, two of the biggest winning pizza brands with investors of the last year actually lost value last week.

Wheat and cheese prices last week both pushed upward in price as pizza restaurants nationally increase operations. (Photo: iStock)

May 26, 2020 by S.A. Whitehead — Food Editor, Net World Media Group

The main commodities that make the pizza restaurant world go 'round all increased in price last week, including a continuation of significant upward price surges for cheese, along noteworthy gains for wheat, auto fuel and even natural gas – all indications that restaurant businesses and people are engaging more, even if it is from 6 feet away. 

Meantime, in pizza company stock trading, it was a week of role reversals. The two major pizza brands that have seen the most growth in stock value over the last year — Domino's Pizza Inc. and Papa John's — both lost value in trading last week, while two pizza brand companies that have trended lower in value over the last year — Rave Restaurant Group and Yum Brands —  gained value in the run-up to the long Memorial Day weekend. 

Pizza Hut parent, Yum Brands, gained $2.35 over the week's trading activity, closing Friday at $87.25. Meanwhile, Pizza Inn and Pie Five parent, Rave Restaurant Group also posted a gain — in this case the company was up 6 cents — to close the week at 87 cents. 

In the loss column, Domino's dropped down $3.94 in value to close the trading week at $372.10, while Papa John's closed Friday at $77.70, that's down $4.20 from the previous week's close of  $81.90.

Cheese

On the cheese markets, the U.S. Department of Agriculture reported that the average price for barrels leapt up 31 cents last week, selling for $1.83 on average, while blocks average 30 cents higher at $1.89. 

The presence of the COVID-19 pandemic has presented cheese makers with a metaphorical roller coaster in regard to supply, demand, production and milk availability, the U.S.D.A. said. On the whole though, cheese producers are busier with some of the stocks of product that have been built up over the past month, already obligated to customers who bought the commodity when markets were much lower.

But heavy inventories pose much less of a concern now, as markets have shot up from a month earlier. Nonetheless, some U.S.D.A. contacts nationally are questioning the longevity of market bulls. But the broad view shows the market volatility now with April prices on the Chicago Mercantile Exchange trending closer to $1, while last week at the end of May, those prices were closing in on the $2 mark.

Wheat

Compared to last week, cash bids for wheat were mostly higher, with wheat export sales showing an increase of 6.5 million bushels for 2019-20. More specifically, wheat last week ranged from 6 cents lower to 11 cents higher, the U.S.D.A. said. 

Kansas City U.S. No. 1 hard red winter, ordinary protein rail bid was 7 ¾ cents higher from $5.44 1/2-$5.54 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 11 cents higher at $5.36 per bushel. Minneapolis and Duluth U.S. No. 1 dark northern spring, 14% to 14.5% protein rail, was steady at $6.33 per bushel.  Portland U.S. soft white wheat rail was 6 cents lower to 7 cents higher from $6.07-$6.09 per bushel.

Auto fuel

As most pizza restaurateurs likely anticipated, pump prices last week shot up in preparation for the long Memorial Day Weekend when, despite the pandemic, many were traveling to family and friends, or just some wide open space or park where kids and pets can run. As a result, the prices paid for gas rose 6 cents on average nationally over the previous week or 12 cents over a month ago to average in the $1.95-range per gallon of regular. 

But the somewhat encouraging news for delivery-dependent pizza brands is that those higher prices are still about 92 cents lower than they were a year ago, according to the American Automobile Association. In fact, even with last week's price hikes, AAA said the last time the national average was less than $2/gallon heading into a Memorial Day Weekend — as it was last week — was in 2003. 

Currently, the average price for a gallon of regular is $1.96, up 7 cents from last week 19 cents from a month ago, but still well below the $2.83 we were paying last year at this time for a gallon of regular. Prices for mid-grade ($2.31) and premium ($2.58) also followed those same ranges in comparison to previous weeks and last year. Finally, a gallon of diesel today averaged $2.41, which is flat from last week and actually 6 cents lower than last month, while E85 was $1.84, up a nickel from a week earlier and a hefty 23 cents higher than last year at this time. 

Natural gas

For the last week of records that ended on May 20, natural gas spot prices rose at most locations, with the Henry Hub spot price ticking up from $1.56 per million British thermal units (MMBtu) to $1.83/MMBtu over the week. 

At the New York Mercantile Exchange, the price of the June 2020 contract increased 16 cents, from $1.62/MMBtu to $1.77/MMBtu yesterday. The price of the 12-month strip, averaging June 2020 through May 2021 futures contracts, climbed 4 cents/MMBtu to $2.40/MMBtu.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 52 cents/MMBtu, averaging $4.27/MMBtu for the week. The prices of natural gasoline and ethane rose by 8% and 18%, respectively. The prices of propane, butane, and isobutene each rose by 13%. Ethane prices continue to rise above their long-term trend of value relative to natural gas amid concerns about declining liquids-rich natural gas production and its impacts on availability of ethane as a petrochemical feedstock, according to the U.S. Energy Information Administration.

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.