Article

Commodities: Cheese, wheat drop, fuel rises

Agricultural commodities gave pizza restaurateurs a break last week in trading with the price of both wheat and cheese falling, but those gains were made up for with losses in increasing gas and natural gas prices.

August 29, 2016 by S.A. Whitehead — Food Editor, Net World Media Group

Agricultural commodities gave pizza restaurateurs a break last week in trading with the price of both wheat and cheese falling over the five days. Those gains were made up for with losses, however, in increasing gas and natural gas prices. Pizza stocks were largely up for the major chains but fell slightly for the smaller brands monitored over the course of the week. 

Cheese  

The price of cheese dropped substantially on the week, from $1.87 on Aug. 19, to fall 13 cents over the week to $1.74 last Friday. 

Wheat

Grain bids were lower, pressured by the higher U.S. dollar and slow export news. Wheat was 11 to 19 cents lower. Here is the data from trading around the U.S., according to the U.S. Department of Agriculture Agricultural Marketing Service. 

In Kansas City, prices ran $3.31 3/4 to $3.34 3/4 last Friday, down substantially from the same time last year when prices hovered around $4.42 3/4. In Minneapolis the price last Friday was $4.92 3/4 down from $5.10 1/2 a year ago. In Portland, the price was $4.63 1/2 to $4.67 Friday, compared with $5.38 3/4 to $5.55 this time last year. And finally, in St. Louis, the price was $3.68 to $3.72 which was nearly 30 cents lower than the price this time last year which was $3.97 to $4.43 a bushel.

Gasoline and diesel fuel
Gas and diesel prices are up slightly. A gallon of regular today is going for $2.22, compared with $2.16 a week ago and $2.14 a month ago, but last year’s price was substantially higher at $2.49. The same story was reflected across the grades, with mid-grade going for $2.47 today, up 4 cents from a week ago and a nickel from last month, but again, substantially lower than the $2.77 we paid last year at this time. Premium was averaging around $2.71 today, up from $2.67 last week and $2.66 last month, but down from $2.99 a year ago. Diesel reflected the same story, with the current average at $2.36, up 3 cents from last week and last month, but far lower than the $2.57 we paid last year. 

Natural gas
Natural gas spot prices rose at most locations this report week (Aug. 17- 24). The Henry Hub spot price rose from $2.71 per million British thermal units (MMBtu) last Wednesday to $2.77/MMBtu yesterday. At the New York Mercantile Exchange, the September 2016 contract rose 18 cents, from $2.619/MMBtu last Wednesday to $2.796/MMBtu yesterday. Net injections to working gas totaled 11 Bcf for the week ending Aug.19. Working gas stocks are 3,350 billion cubic feet, which is 9 percent greater than the year-ago level and 12 percent greater than the five-year (2011-15) average for this week.
   

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by18 cents, closing at $4.80/MMBtu for the week ending Aug. 19. The price of ethane and isobutane both fell by 1 percent. According to Baker Hughes, for the week ending Friday, Aug. 19, the natural gas rig count remained flat at 83. The number of oil-directed rigs rose by 10 to 406. The total rig count climbed by 10, and now stands at 491. This week marks the eighth consecutive weekly increase in the total rig count.

This report week, the Henry Hub spot price rose 6 cents from $2.71/MMBtu last Wednesday to $2.77/MMBtu yesterday. Price increases near the end of the report week may have been the result of forecasts for warmer weather in the coming days. Declines in power burn drive overall consumption declines. During the report week, total U.S. consumption of natural gas fell by 5 percent, according to data from PointLogic. Power burn declined by 12 percent week over week as temperatures remained warm but moderated from extreme heat. Industrial sector consumption stayed constant, averaging 19.4 Bcf/d. Natural gas exports to Mexico went up 4 percent.

Pizza company stocks
For pizza stocks, the larger chains gained slightly on the week, while the smaller chains monitored here, dropped. Domino’s rose over the week from $147.79 Monday morning to $148.35 at the close on Friday, while Yum Brands, owner of the Pizza Hut chain, increased its worth on the week 19 cents from $89.34 on Monday morning o $89.53 at the close on Friday. 

The news is not as good for Papa John’s, which over the course of last week dropped 38 cents in value to $74.45 at the closing bell on Friday. Meanwhile, Papa Murphy’s opened last week at $6.11, then tumbled through the week to close at $5.77 on Friday. 

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.