Article

Commodities: A relatively rough week for most pizza makers

Last week was not the cheeriest for the pizza marketplace with most pizza stocks dropping.

August 8, 2016 by S.A. Whitehead — Food Editor, Net World Media Group

Last week was not the cheeriest for those who make their living in the pizza marketplace, which saw steady increases in cheese and wheat, while most pizza stocks dropped in value. 

Cheese 
The price of cheese jumped another 9 cents last week, closing the week at $1.82, up from the previous Friday's close of $1.73. This upward trend has been making this commodity an increasingly negative player in the pizza operator's bottom line. 

Wheat 
Wheat has also started moving upward, jumping to $4.95, a full 7 cents higher than the previous week's close of $4.88 a bushel. 

Gasoline and diesel fuel 
Gas remains a relative bright spot on the commodities horizon, continuing its decline in price, but perhaps slowing down a bit. The price of a gallon of regular unleaded gas today is about $2.12 on average nationwide. That's down a penny from the previous week and 13 cents from a month ago, when the price was $2.25. Last year the price was $2.61.

For mid-grade this morning the average price was $2.40 a gallon which was about the same as last week, but down 12 cents from last month and 17 cents from last year. 

Premium fuel was $2.64 this morning, down a cent from last week and 11 cents from last month. A year ago, premium was priced at a full 43 cents more a gallon. 

Diesel fuel is averaging about $2.30 a gallon nationally, down 2 cents from a week ago and 7 cents lower than last month. This time last year, a gallon of diesel was $2.69. 

Natural gas
Consumption of natural gas for power generation has been very high throughout 2016, but recently hit its highest daily level on record on July 21, reaching 40.9 billion cubic feet per day (Bcf/d). Power burn surpassed the 40 Bcf/d threshold on three separate days in late July as widespread hot weather led to strong demand for air conditioning. 

According to PointLogic data, nine of the ten highest power burn days on record occurred in July 2016, and one was in July 2015. Natural gas consumption for power generation in July averaged 36.1 Bcf/d, according to PointLogic data. This is 2.7 Bcf/d higher than July 2015 and 1.5 Bcf/d higher than the previous high from July 2012.

For the week ending July 29, inventories posted an overall net withdrawal for the first time in 10 years in the summer months. While positive net withdrawals are very common in the South Central region in the summer, they are usually offset by positive net injections in the other four storage regions. During the most recent storage report week, no part of the Lower 48 states was immune to heat, as highs reached into the 90s throughout most areas of the country.

Low natural gas prices and growth in natural gas power generation infrastructure are the main driving factors behind this summer's growth in natural gas use. 

The Henry Hub spot price rose from $2.80 per million British thermal units (MMBtu) last Wednesday to $2.88/MMBtu yesterday.
At the New York Mercantile Exchange (Nymex), the August 2016 contract expired last Wednesday at $2.672/MMBtu. The September 2016 finished the report week at $2.839/MMBtu, up 17 cents Wednesday to Wednesday.

Pizza company stocks
Domino's was down $1.12 from the previous week to $146. Pizza Hut parent, Yum! Brands Inc. closed the week at $88.74, that's down from the previous week's close of $89.42, which was also down over the previous week by 68 cents. Papa Murphy's closed at $5.40 Friday, down $1.20 from the previous week. 

The only real good news went to Papa John's, which closed at $75.53, up from a close of $73.95 the previous Friday, which was also up 70 cents from the prior week. 


    

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.