Article

Commodities: Investors do a U-turn from last week in favored brands

The tables turned this week in pizza stock trading as investors shifted their confidence in Papa John's from a week earlier to the three other publicly traded brands monitored here weekly.

September 24, 2018 by S.A. Whitehead — Food Editor, Net World Media Group

The tables turned this week in pizza stock trading as investors shifted their confidence in Papa John's from a week earlier to the three other publicly traded brands monitored here weekly. It was an exact reversal of what took place the week before and proof that stockholders are a fickle bunch. Likewise, there was little to celebrate in commodity trading last week as just about everything but a few types of cheese shot up in price over the five-day trading week.

Cheese

Cheese barrels closed at $1.36, with the weekly average at $1.39, off .0765 from the previous week. Forty-pound blocks closed at $16350 and averaged $1.617, which is also off .013, according to the U.S.D.A. Agricultural Marketing Service.

Fresh cheese inventories are moving and generally balanced, with northeastern contacts saying cheese stores produced earlier in 2018 are adequate. But according to some cheesemakers, Midwestern demand has slowed as barrel market prices have descended, and buyers are backing off. 

The U.S.D.A. said its contacts in cheese production and trading expect markets will surmount another downcycle and return to steadiness near term. Cheese demand and production in the West are steady to higher and milk is accessible, but in the rest of the country, milk volumes remain flat to lower.

Wheat

Compared to last week, cash bids for wheat were higher, with markets still being influenced by international trade news and announcements by both the U.S. and China that more tariffs in the ongoing trade disputes are in the pipeline.  

Wheat totaled 17.2 mb and 11.6 mb respectively, keeping total wheat shipments down 31 percent in 2018-19 from a year ago. Wheat was 10 to 56 1/2 cents higher, with Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid at 25 1/4 cents higher, from $5.92-$6.07 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 18 to 26 cents higher, from $4.84-$4.85 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was 51 1/2 to 56 1/2 cents higher, from $6.63 1/2-$6.73 1/2 per bushel. Portland U.S. Soft White wheat rail was 10 to 15 cents higher, from $5.90-$6.05 per bushel.

Vehicle fuel

Demand for vehicle fuel is down, but the prices are not, according to the American Automobile Association, which said the average price of a gallon of regular today came in just over $2.85, steady with the past week or two but a cent higher than last month at the rounding out of the summer travel season.  

Other higher grades of fuel, showed even steeper price increases over the last month, with premium, for instance up 2 cents from last month to $3.40. Diesel added still on to that trend, up 4 cents from last month's price to $3.18 today. Likewise, diesel fuel rises from last year at this time are far more pronounced than increases for regular grades of gasoline, which typically are running 30 cents or more higher than last year. For diesel, the increases from last year's prices are a good 46 cents. 

There's some good news though for E85 users who've seen virtually no change in price over the last month and an increase of just 18 cents over last year at this time to sell for an average oof about $2.41 today. 

Natural gas

Natural gas spot prices were also up at most locations last week, with Henry Hub spot prices rising from $2.93 per million British thermal units (MMBtu) to $3.06/MMBtu over the seven days, according to the U.S. Energy Information Administration. At the New York Mercantile Exchange, the October 2018 contract price rose 8 cents, from $2.829/MMBtu to $2.908/MMBtu.

Net injections to working gas totaled 86 billion cubic feet (Bcf) for the week ending Sept. 14. Working natural gas stocks are 2,722 Bcf, which is 20 percent lower than the year-ago level and 18 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 44 cents, averaging $10.85/MMBtu for the week ending Sept. 19. The price of ethane rose by 15 percent. The price of propane, butane and isobutene each rose by 1 percent. The price of natural gasoline remained flat week over week.

According to Baker Hughes, for the week ending Tuesday, Sept. 11, the natural gas rig count remained flat at 186. The number of oil-directed rigs rose by seven to 867. The total rig count increased by seven, and it now stands at 1,055.

Pizza company stocks

Even as Papa John's debuted a new "John-less" (as in Schnatter) ad campaign, its stock price fell in a direct reversal of the previous week when Papa John's was the lone winner of the brands watched by this site. Indeed, the Louisville-based pizza brand ultimately lost about 61 cents in value over last week's investor activity, closing Friday at $46.23. 

The good news is all three other brands watched by this site saw price upswings over the week's trading. Domino's saw its share value increase to $286.22 from the previous week's close of $280.05, and Pizza Hut and its parent company, Yum Brands, went from $88.14 the previous week at the close to $89.53 Friday. Papa Murphy's closed up 32 cents in value Friday to $5.40.

Photo: iStock

About S.A. Whitehead

---

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.