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Commodities: Fuel markets stuff a little extra cash in pizza operators stockings

Lower natural gas and gasoline prices are giving pizza operators a little holiday love, with nice price drops in both categories over the last week.

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

Lower natural gas and gasoline prices are giving pizza operators a little holiday love, with both fuel segments showing nice drops in price over the last week. Cheese and wheat prices were a little less friendly, but investors made up for those increased costs with increased stock values for three of the four brands watched by Pizza Marketplace weekly. 

Cheese

On the Chicago Mercantile Exchange last week, cheese market prices started to show signs of life by chipping away at the recent price slump. According to U.S.D.A. Agricultural Marketing Service, barrels closed Dec. 14 at $1.31, while 40-pound blocks were $1.41. The weekly average for barrels was $1.27(up .0070) and blocks, $1.36 (up .0080). 

In cheese market sectors — particularly pizza and holiday/packaged cheese — demand is strong. Nevertheless, heavy inventories are keeping the market somewhat bogged down, the service said. 

Wheat

According to the U.S.D.A. Agricultural Market News, cash bids for wheat were mixed last week.  Last week's export sales and shipments of wheat totaled 27.7 million and 18.0 million bushels, respectively.  After the U.S.D.A. reduced the export estimate for wheat by 25 million to 1.0 billion bushels on Tuesday, total wheat shipments are now down 14 percent from a year ago, while total export commitments are down 10 percent. 

Wheat last week ranged from 5 cents lower to 26 cents higher. Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 24 1/2 cents higher, from $6.40-$6.55 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 20 to 26 cents higher at $5.61 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was 5 cents lower to 9 cents higher, from $6.83 1/4-$7.08 1/4 per bushel. Portland U.S. Soft White wheat rail was steady from $6.15-$6.30 per bushel.

Vehicle fuel

Domestic crude inventories dropped for a second week, according to AAA, which said the average national price for regular grade gas today was $2.37, down 5 cents from last week, 26 cents from last month and even 6 cents from last year at this time. Mid-grade ($2.71 this morning) and premium ($2.97) gasoline followed the same trend, although not quite as dramatically. 

Diesel averaged $3.07 this morning, 4 cents lower than last week and 16 cents below last month, but still 24 cents higher than last year at this time. And finally, E85 came in at $2.09 this morning, 19 cents lower than last month, but still 6 cents above the price we paid last year at this time for that grade.  

Natural gas

According to the U.S. Energy Information Administration, natural gas spot prices fell at most locations for the seven days ending Dec.12. Henry Hub spot prices fell from $4.62 per million British thermal units (MMBtu) to $4.20/MMBtu over that same period.

At the Nymex, the price of the January 2019 contract decreased 33 cents, from $4.469/MMBtu to $4.136/MMBtu Dec. 12. The price of the 12-month strip, averaging January 2019 through December 2019 futures contracts, declined 8 cents/MMBtu to $3.165/MMBtu.

Net withdrawals from working gas totaled 77 billion cubic feet (Bcf) for the week ending Dec. 7. Working natural gas stocks are 2,914 Bcf, which is 20 percent lower than the year-ago level and 20 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 6 cents/MMBtu, averaging $6.73/MMBtu for the seven days ending Dec. 12. The price of ethane and isobutane fell by 2 and 1 percent, respectively. The price of natural gasoline, propane and butane rose by 5, 1 and 4 percent, respectively.

According to Baker Hughes, for the seven days ending Tuesday, Dec. 4, the natural gas rig count increased by nine to 198. The number of oil-directed rigs fell by 10 to 877. The total rig count decreased by one, and it now stands at 1,075.

Pizza company stocks

It was another tough trading week for pizza giant, Domino's, which again dropped in value, closing Friday at  $249.01, down $9.31 from the previous Friday's close on the New York Stock Exchange. 

The other three brands monitored here weekly, however, managed to grow their values over the trading week, in small but still encouraging ways. For instance, Pizza Hut parent, Yum Brands, closed Friday at $91.70, up $1.27 from the previous Friday. 

The two "Papas" also gained on the week, with Papa John's coming in Friday at $45.41, up 32 cents from the previous week's close. Take-and-bake brand, Papa Murphy's eked out a penny increase in value over the week, to close Friday at 5.14.

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.