Commodities: Let's just pretend last week didn't happen

| by S.A. Whitehead
Commodities: Let's just pretend last week didn't happen

It was an unfriendly week for pizza stocks last week, and commodity prices for those in the pizza game didn't provide much help either. The price of cheese was the only real money-saver for pizza operations last week.

Cheese prices continued to free fall with the average paid on Friday afternoon at just under $1.39, down 11 cents from the previous Friday. In fact, since Feb. 1, cheese prices have fallen on average 64 cents on average much to pizza restaurateurs' delight. 

Wheat was mostly lower, but weather conditions remain challenging for the Hard Red Winter wheat crop across the U.S. Southern Plains, so prices could soon increase, according to the U.S.D.A. Agricultural Marketing News Service. 

Weekly export sales for wheat were listed at 15.9 mb (450,500 mt) with 14.4 mb (391,600 mt) for the 2016-2017 marketing year. Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 2 3/4 to 7 3/4 cents lower from $4.79 1/2 to 5.34 1/2 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 to 8 cents lower from $4.24 to $4.38 per bushel.  

Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14 to 14.5 percent  protein rail, was 14 1/4 cents lower to 24 3/4 cents higher from $6.18 3/4 to $6.62 3/4 per bushel. Portland U.S. Soft White wheat rail was 8 3/4 cents lower from $4.64 to $4.79 per bushel.

Gasoline and diesel fuel
Vehicle fuels is slightly more costly than last month and remains far more expensive than it was this time last year, but appears to be flattening out over the last few weeks. The price this morning for a gallon of regular was $2.30, down a cent from a week ago, but up 2 cents from last month and 37 cents from last year at this time.

That trend was repeated across all grades, as well as diesel which has risen over the last year even more greatly than all grades of gasoline fuel. Mid-grade this morning sold for $25.8, while premium went for $2.82 and diesel came in at $2.52 on average. Those prices are all between 41 and 44 cents higher than this time last year. 

Natural gas
Working gas stocks rose 7 billion cubic feet (Bcf) in the Lower 48 states for the week ending February 24. This is the earliest that working gas stocks have posted net injections on a national level since weekly reporting began 23 years ago. Net injections into working gas storage typically do not occur until March. The stock rise is attributable to reduced demand due to warmer weather as temperatures have been considerably warmer than normal since the beginning of the new year.

According to the National Oceanic and Atmospheric Administration (NOAA), temperatures during February 2017 were the second warmest in the 123-year period of record, and the warmest since 1954. On average, temperatures were 10 degrees warmer than normal throughout the Lower 48 states for the week ending February 24. 

Heating degree-days (HDD), a measurement derived from weather temperature data to represent space heating needs for buildings, were 41 percent below normal during the week ending Feb. 24. This pattern prevailed throughout the Lower 48 states, outside of the Pacific region, and was especially pronounced in key natural gas demand areas of the East and Midwest, where HDD were 26 and 55 percent below normal, respectively. 

In addition, HDD in southern regions of the country, including the East and West South Central, and South Atlantic census divisions were 48 percent below normal. These declines in space heating requirements resulted in significant drops in natural gas consumption.

Still, natural gas spot prices rose at most locations from March 1 to March 8. The Henry Hub spot price rose from $2.60 per million British thermal units (MMBtu) to $2.69/MMBtu over that same period. At the New York Mercantile Exchange (Nymex), the April 2017 contract rose 10 cents from $2.799/MMBtu last Wednesday to $2.901/MMBtu yesterday.

Net withdrawals from working gas totaled 68 billion cubic feet (Bcf) for the week ending March 3. Working natural gas stocks are 2,295 Bcf, which is 8 percent less than the year-ago level and 19 percent greater than the five-year (2012–16) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 57 cents, closing at $6.23/MMBtu for the week ending March 3. The price of ethane, propane, butane, and isobutane fell by 9, 11, 15 and 9 percent, respectively. The price of natural gasoline rose by 2 percent.

Pizza company stocks
All four brands monitored by this site lost fairly significant value last trading week with even Domino's Pizza falling almost $3 in value between last Friday's close and that of the previous week. The closing price on Friday at $186.27, down from $189.04 on March 3. 

The news was not much better for Pizza Hut parent, Yum Brands, which dropped to $64.31 Friday at the close, down $1.62 from the previous Friday. Papa John's followed with a drop of $2.18 on the week's trading, which closed Friday at $75.79.

For Papa Murphy's, which got some good news last week from an annual consumer preference survey, the week's trading shaved 18 cents off the brand's value which closed at $3.96, down from $4.14 the previous Friday. 

Photo: iStock

Topics: Business Strategy and Profitability, Financial Management

S.A. Whitehead

Award-winning veteran print and broadcast journalist, Shelly Whitehead, has spent most of the last 30 years reporting for TV and newspapers, including the former Kentucky and Cincinnati Post and a number of network news affiliates nationally. She brings her cumulative experience as a multimedia storyteller and video producer to the web-based pages of and after a lifelong “love affair” with reporting the stories behind the businesses that make our world go ‘round. Ms. Whitehead is driven to find and share news of the many professional passions people take to work with them every day in the pizza and quick-service restaurant industry. She is particularly interested in the growing role of sustainable agriculture and nutrition in food service worldwide and is always ready to move on great story ideas and news tips.

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