Commodities: Papa John's in free fall

| by S.A. Whitehead
Commodities: Papa John's in free fall

Both pizza commodities and brand trading prices mixed things up last week, with some staples, like cheese heading up at the start of the school year, while gas prices dropped at the close of summer travel. For the brands themselves, news was relatively good outside of the Papa John's chain. 

Football pre-season boosts pizza cheese demand

Barrels closed at $1.62, while the closing price for 40-pound blocks closed at $1.6575. The weekly average for barrels was $1.5345, which is up $0.0995, while the average price for blocks was $1.6110, up $0.0670.

The U.S.D.A. reports that milk supplies headed for cheese vats are lower nationally, due to summer weather,  as well as Class I/bottling increases at the onset of another academic year. But cheese production remains active and milk remains sufficient to run full production schedules if plant managers see the need. 

Cheese demand is mixed by variety and region, the U.S.D.A. said, but pizza cheese sales, in particular, are beginning to pick up the pace during football pre-season. Cheese curds are also moving well according to upper Midwestern contacts, while seasonal fairs and carnivals are in full swing. 

Cheese inventories are steady to higher across the nation. Both barrel and block prices are gaining momentum and current market tones are bullish. 

Wheat sales heavy and higher

Compared to last week, cash bids for wheat were mostly higher. Wheat sales reached 11.6 million bu., which the U.S.D.A. said were at the top end or above trade expectations. 

Wheat was steady to 32 cents higher. Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 9 1/4 cents higher, from $6.63 1/2-$6.78 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 steady to 1 cent higher, from $5.60-$5.64 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was 9 1/4 to 14 1/4 cents higher at $6.94 3/4 per bushel. 

Portland U.S. Soft White wheat rail was 20 to 32 cents higher, from $6.12-$6.28 per bushel.

U.S. gas demand and price drop back

As the summer travel season dwindles to a close and kids head back to class, gas prices are also behaving themselves a little better and returning to tamer prices across the U.S. The price for regular this morning averaged $2.86, a good 3 cents below what Americans paid on average one month ago, though still a good 51 cents above the price we paid last year at this time. 

A similar trend held true across mid-grade and premium, while the price of diesel average $3.15 a gallon today, just two cents lower than last month and for E-85 the difference between now and a month ago was less than a penny, with today's price averaging $2.42. But again, even for diesel and E85, prices ranged well above what we paid last year, which averaged just $2.53 for diesel and $2.02 for E85. 

Natural gas heads back up again

Natural gas spot prices rose at most locations for the report week ending Aug. 8. Henry Hub spot prices rose from $2.80/MMBtu to $2.97/MMBtu over that period. At the New York Mercantile Exchange (Nymex), the September 2018 contract price rose 19 cents, from $2.758/MMBtu to $2.949/MMBtu.

Net injections to working gas totaled 46 billion cubic feet (Bcf) for the week ending Aug. 3. Working natural gas stocks are 2,354 Bcf, which is 22 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, fell by 8 cents, averaging $9.00/MMBtu for the week ending Aug. 8. The price of natural gasoline and propane both fell by 1 percent, while the prices of butane and isobutane fell by 16 and 8 percents, respectively. The price of ethane rose by 11 percent.

According to Baker Hughes, for the week ending Tuesday, July 31, the natural gas rig count decreased by three to 183. The number of oil-directed rigs fell by two to 859. The total rig count decreased by four, and it now stands at 1,044.

Brand trading: Papa John's continues to hemorrhage

News wasn't great for Papa John's as the brand continues to lose value, closing last week $40.26, a price the chain last saw five years ago in October 2013. In fact, Friday's closing value for Papa John's was less than half of the peak price paid for the stock nearly two years ago when it topped out at $88.36 on Nov. 1, 2016. 

Meanwhile at less controversial brands, like Domino's, the news was decidedly brighter when that chain closed Friday at $291.31, a healthy $11.81 above its closing price a week earlier of $279.50.

Pizza Hut parent, Yum Brands, also had another nice week on the trading floor, closing Friday at $82.94, up $1.08 from the previous week's close. 

Papa Murphy's, however, took some steps back last week in trading, closing Friday at $5.31, down nearly 20 cents from the previous week's close of $5.50. 

Photo: iStock

Topics: Business Strategy and Profitability, Cheese, Delivery, Dough, Operations 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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Commodities: Down, down, down ... unless you're Papa John's