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

Pizza operators got a break from most commodity prices last week, which turns out to be a particularly good thing since three of the four brands monitored here lost a chunk of value over the five days. The exception? Surprise! Papa John's.

September 17, 2018 by S.A. Whitehead — Food Editor, Net World Media Group

The tables turned last week for pizza brands as three of the four chains monitored by this site fell in value, while the embattled Papa John's brand actually grew price-wise on the NASDAQ over the five days. But for the losers there was some relief on the commodity trading side, with cheese, wheat and natural gas all lower and only vehicle fuel prices edging up slightly. 

Cheese

Barrels closed at $1.42, down 8 cents on the week, while 40-pound blocks ending at $1.6050, a 6 cent drop from the previous week's close. The weekly average for barrels was $1.47, down .1144, while blocks were down .0494 to end at $1.63. 

The U.S.D.A. said cheese contacts across the country suggest milk volumes are not as easy to locate this week with continued humidity tapering milk output and school pipelines being filled. Mozzarella and other pizza cheese producers are seeing a college demand bump. Fresh stocks of specialty cheeses are also in high demand, according to the organization's Midwestern cheese contacts. 

Cheese inventory reports range from balanced to plentiful, depending on the age of the supply. With modestly bullish sentiment on supply/demand balances and growing customer bases being reported, cheese contacts find the recent market downturn curious. Cheese sellers tell the U.S.D.A. that market uncertainty creates hand-to-mouth buying, as buyers hold off for potentially lower price points. 

Wheat

Compared to last week, cash bids for wheat were lower, according to the U.S.D.A. Another round of trade talks between the US and China are set to take place and seem to have a more optimistic tone with hopes of reaching an agreement.  

Weekly export sales of wheat totaled 14.2 mbu of wheat. Wheat was from 9 3/4 to 49 3/4 cents lower, with Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid at 20 cents lower, from $5.66 3/4-$5.81 3/4 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 16 cents lower, from $4.58-$4.67 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was 9 3/4 to 49 3/4 cents lower, from $6.12-$6.17 per bushel. Portland U.S. Soft White wheat rail was 10 cents lower, from $5.80-$5.90 per bushel.

Vehicle fuel

In this delivery-heavy restaurant sector, it's been good news to have gas prices recently remaining flat or slightly lower, but last week the movement for prices on everything but E85 edged up slightly, according to AAA. Regular, for instance, average $2.85 today, up a half-cent from last week and flat to month-ago prices. The same trend continued for higher grades, while diesel rose significantly over the last month from $3.15 to $3.19 Friday. 

The one bright note was in E85 prices which dropped about 2 cents from last month, to settle in around $2.41 today. Of course, that was significantly higher than last year at this time, when we paid $2.16 for E85, $2.63 for regular and $3.14 for diesel. 

Natural gas

U.S. natural gas spot prices fell at most locations the report week ending Wednesday, Sept. 12, according to the U.S. Energy Information Administration. Henry Hub spot prices decreased from $2.94 per million British thermal units (MMBtu) to $2.93/MMBtu over that period. At the New York Mercantile Exchange (Nymex), the October 2018 contract price rose 3 cents, from $2.795/MMBtu to $2.829/MMBtu.

Net injections to working gas totaled 69 billion cubic feet (Bcf) for the week ending Sept. 7. Working natural gas stocks are 2,636 Bcf, which is 20 percent lower than the year-ago level and 18 percent lower than the five-year (2013-17) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 58 cents, averaging $10.41/MMBtu for the week ending Sept. 12. The price of natural gasoline fell by 2 percent. The price of ethane rose by a hefty 20 percent, the administration said, while propane, butane, and isobutane rose by 1, 1 and 8 percent, respectively.

According to Baker Hughes, for the week ending Sept. 4, the natural gas rig count increased by two to 186. The number of oil-directed rigs fell by two to 860. The total rig count stayed at 1,048.

Pizza company stocks

Investors showed confidence last week in Papa John's reincarnation powers when they joined forces on the NASDAQ to elevate the brand's value nearly $1 on the week. The brand closed Friday at $46.84, up from $45.91 the previous week's close. 

Meanwhile, things were not as positive for the other brands monitored here weekly, with Domino's falling $14.02 cents over the week's trading to end Friday at $280.05, down from $294.07 the previous Friday. Also on the NYSE Friday, Pizza Hut parent, Yum Brands fell about 26 cents in value Friday to close at $88.14, while take-and-bake brand, Papa Murphy's fell 22 cents on the NASDAQ to close at $5.08 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.