Commodities: Changes ahead?

| by S.A. Whitehead
Commodities: Changes ahead?

Prices on pizza topping and base ingredients were largely lower last week in trading, but so were the values of most pizza brands in investors' eyes. There could, however, be change coming as market factors like increasing school year demand for pizza, potential international trade issues and even the soaring costs of transporting commodities all threaten to add cents to the prices of pizza staples in the weeks to come. 

Cheese

The U.S.D.A. reports that Midwestern cheese producers are seeing their profits and progress both threatened by hauling costs and other transportation-related issues. A number of Midwestern producers ship cheese eastward, and they relay it has become problematic to find truckers at reasonable prices, particularly for interstate hauls. 

Cheese demand is variant nationwide. Pizza cheesemakers are seeing seasonal strength with the onset of both the fall college semester and football season. On Thursday, after recent steadiness/strength on the markets, barrel and block prices fell a combined 14 cents, the department said. 

On Friday, closing prices for barrels were $1.5000, compared to $1.6450 the week prior. The closing price for blocks is $1.6625, compared to the previous Friday's close of $1.6950.

Wheat

Cash bids for wheat last week were mostly lower. Trade disputes continue to be a market factor as more potential tariffs between the U.S. and China are being discussed.  The weekly export sales report was bearish for wheat, with only 379,800 metric tons of sales documented.  

Wheat was from 20 1/4 cents lower to 3 cents higher, according to the U.S.D.A, which reported that Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 20 1/4 cents lower, from $5.86 3/4-$6.01 3/4 per bushel. Kansas City U.S. No. 2 Soft Red winter rail bid was not quoted.  

St. Louis truck US No 2 Soft Red Winter terminal bid was 15 to 19 cents lower, from $4.74-$4.83 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was 12 cents lower to 3 cents higher, from $6.21 3/4-$6.66 3/4 per bushel. Portland U.S. Soft White wheat rail was 8 to 10 cents lower, from $5.90-$6.00 per bushel.

Vehicle fuel

Despite high demand, gas prices are remaining relatively steady, according to AAA, with the current price for regular hovering around $2.85 in the U.S. That's down 2 cents from last month, but still a good 20 cents above the prices we paid last September. 

Mid-grade and premium fuels followed the same trend with premium fetching about $3.40 nationwide today,, while mid-grades ran in the $3.15 range. 

For alternative fuels, like E85 that same trend was in effect for that option which ran about $2.42 this morning. But the price fluctuation between today and last year for diesel fuel was far more marked. Last year at this time, for instance, diesel ran about $2.71 a gallon, a good 47 cents below the $3.18 being charged for diesel at the pumps today. 

Natural gas

Natural gas spot price movements were mixed the report week ending Wednesday, Sept. 5. Henry Hub spot prices fell from $2.96 per million British thermal units (MMBtu) last to $2.94/MMBtu over that same period. 

At the New York Mercantile Exchange, the September 2018 contract expired at $2.895/MMBtu. The October 2018 contract price decreased to $2.795/MMBtu, down 7 cents Wednesday to Wednesday.

Net injections to working gas totaled 63 billion cubic feet (Bcf) for the week ending Aug. 31. Working natural gas stocks are 2,568 Bcf, which is 20 percent lower than the year-ago level and 19 percent lower than the five-year (2013-17) average for the week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 39 cents, averaging $9.77/MMBtu for the week ending Sept. 5. The price of natural gasoline, ethane, propane, butane, and isobutane all rose by 2, 5, 4, 2 and 9 percent, respectively.

According to Baker Hughes, for the week ending Tuesday, Aug. 28, the natural gas rig count increased by two to 184. The number of oil-directed rigs rose by two to 862. The total rig count increased by four, and it now stands at 1,048.

Pizza company stocks

All the pizza brands monitored here weekly dropped in value last week, aside from Pizza Hut parent, Yum Brands, which closed Friday at $88.40, up nearly $2 over last week's $86.89, according to market reports. For Papa John's International, the brand's value lost about 21 cents over the week's trading,  coming to rest Friday at $45.91 from its previous week's close of $46.12.

Domino's followed suit, falling in value to $294.07 Friday, from $298.56 the previous week's close — off  $4.49 over the seven days. Papa Murphy's traded 25 cents lower on the week, closing at $5.30 Friday, down from $5.55 the previous week's close. 

 

Photo: iStock
 


Topics: Business Strategy and Profitability, Cheese, Delivery, Dough, Financial Management, Financial News, Food Cost Management, Operations Management, Pizza Toppings, Trends / Statistics



S.A. Whitehead

Award-winning veteran print and broadcast journalist, Shelly Whitehead, has spent most of the last 30 years reporting for TV and newspapers, including the former Kentucky and Cincinnati Post and a number of network news affiliates nationally. She brings her cumulative experience as a multimedia storyteller and video producer to the web-based pages of Pizzamarketplace.com and QSRweb.com after a lifelong “love affair” with reporting the stories behind the businesses that make our world go ‘round. Ms. Whitehead is driven to find and share news of the many professional passions people take to work with them every day in the pizza and quick-service restaurant industry. She is particularly interested in the growing role of sustainable agriculture and nutrition in food service worldwide and is always ready to move on great story ideas and news tips.


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Commodities: Down, down, down ... unless you're Papa John's