Article

Commodities: Investors hand 3 pizza brands a 'turkey'

Three of the four major pizza brands watched weekly by this website had relatively rough trading weeks where they watched their companies' values drop. The one brand that did increase in value was Papa John's.

November 19, 2018 by S.A. Whitehead — Food Editor, Net World Media Group

The investors who were so kind and giving the week before last, ended up handing most of the pizza brands monitored by Pizza Marketplace a real "turkey" this past week, when all brands but Papa John's saw values drop over the five days of trading.

But despite the words of Papa John's franchisees' attorney detailing the hurt those businesses have faced over the last year of controversy for the brand, investors put their dollars behind the Louisville-based chain in expectation of happier days ahead. 

Cheese

Barrels closed at $1.36, while 40-pound blocks ended up at $1.45. The weekly average for barrels was up 3 cents to $1.35, and blocks fell 2 cents to $1.40 last week. 

The U.S.D.A. Agricultural Marketing Service reports the nation's cheese markets are in recovery mode, as Monday's block prices fell to their lowest point since May 2016. Since Monday, cheese market prices are showing some bounce back, but the service said its contacts are anxious and hopeful for a longer-term steadiness in cheese prices in the wake of what has been a murky start to the fourth quarter. 

Cheese demand has been mixed by region, and within each region, in some cases. The strong U.S. dollar, weaker euro and tariff-related push back all have international buyers either hesitant or searching elsewhere for better values. Barrel inventories and other stocks produced in the previous quarters are reportedly long. 

Wheat

Compared to last week, cash bids for wheat were mixed, according to the U.S.D.A. The weekly export sales report showed 438,300 metric tons of wheat in the week leading up to Nov. 8. 

Wheat was from 17 1/4 cents lower to 62 cents higher, with Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid at 17 1/4 cents lower from $5.95-$6.10 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 2 cents lower to 62 cents higher, from $5.29-$5.30 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, has no comparison at $7.14 3/4 per bushel. Portland U.S. Soft White wheat rail was steady, from $6.20 to $6.35 per bushel.

Vehicle fuel

Fuel prices, of late, have given delivery-centered brands some real cause for thanks this holiday week, as AAA said crude inventories are building again, driving prices down nationally. Today, the price of a gallon of regular averaged $2.62 according to the auto club, down 4 cents from last week and a hefty 25 cents from just last month. 

Midgrade (averaged $2.95), premium (averaged $3.21) and E85 (averaged $2.27) followed suit with their lower-grade friend's price, and even diesel dropped slightly to $3.22 a gallon, down 3 cents from last week and 8 cents from last month. And if you want even more to be thankful about this holiday week, just remember the week of July 17, 10 years ago when Americans were paying on average a substantial $4.11 per gallon for regular unleaded, the highest price ever recorded for the fuel. 

Natural gas

Natural gas spot prices rose at most locations for the report week ending Nov. 14. Henry Hub spot prices rose from $3.51/MMBtu to $4.59/MMBtu over that period, according to the U.S. Energy Information Administration. At the Nymex, the December 2018 contract price rose $1.28, from $3.555/MMBtu to $4.837/MMBtu Nov. 14.

Net injections into working gas totaled 39 Bcf for the week ending Nov. 9. Working natural gas stocks are 3,247 Bcf, which is 14 percent lower than the year-ago level and 16 percent lower than the five-year (2013-17) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 60 cents/MMBtu, averaging $6.95/MMBtu for the seven days ending Nov. 14. The price of natural gasoline, propane, butane and isobutane fell by 11, 11, 12 and 10 percent, respectively. The price of ethane rose by 3 percent.

According to Baker Hughes, for the seven days ending Nov. 6, the natural gas rig count increased by two to 195. The number of oil-directed rigs rose by 12 to 886. The total rig count increased by 14, and it now stands at 1,081.

Pizza company stocks

As mentioned, three of the four pizza brands monitored weekly dropped in value last week, beginning with the biggest loser of the quartet, Domino's, which closed Friday at $264.62, down $9.73 from the previous week's close. Pizza Hut parent Yum Brands took a $1.83 hit in value over the trading week, closing Friday $88.89. 

Papa John's bucked the overall trading trend for the week, however, jumping up a healthy $3.71 in value to close Friday at $58.92. This investor confidence came even though a franchise attorney representing owners of 1,200 units with the brand told this website his clients have had a horrendous business year following the public relations problems Papa John's has experienced since November 2017. 

But for smaller take-and-bake brand Papa Murphy's investors showed weakening faith in the chain as they pulled back 5 cents over the week's trading to close Friday at $5.32. 

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.