Article

Commodities: Yes, Papa John's took a hit

Last week’s commodities trading was a mixed bag of good and bad news, with minor wins for pizza operators on cheese and natural gas prices. But, in trading on Wall Street, it was all about the fallout from Papa John's CEO John Schnatter's comments about the NFL’s effects on the brand’s Q3 performance.

November 6, 2017 by S.A. Whitehead — Food Editor, Net World Media Group

Last week's commodities trading was a mixed bag of good and bad news, with minor wins for pizza operators on cheese and natural gas prices. But, in trading on Wall Street, it was all about the fallout from Papa John's CEO John Schnatter's comments about the NFL’s effects on the brand’s Q3 performance, which could ultimately end up making the fourth quarter performance worse.  

Cheese

After a week above $1.75, the average price for cheese on Friday fell to $1.72. This commodity has remained fairly steady in the $1.70-plus range for the past month.

Wheat

Wheat was mixed, from 17 3/4 cents lower to 22 1/2 cents higher in trading last week. Weekly export sales and shipments for wheat totaled 12.8 and 13.9 mb, respectively. Both numbers are below the previous year and may be viewed as neutral to bearish for wheat, according to the USDA news service.

Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 2 1/5 cents lower to 22 1/2 cents higher at $4.56 3/4 –$6 3/4 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 7–13 cents higher from $4.31–$4.38 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14–14.5 percent protein rail, was 17 3/4 cents lower to 7 1/4 cents higher at $7.37 3/4–$7.77 3/4 per bushel, while Portland U.S. Soft White wheat rail was 5 to 10 cents lower at $5.20–$5.35 per bushel.

Gasoline and diesel fuel

                                   Regular            Mid-grade      Premium          Diesel

Current Avg.               $2.529             $2.811             $3.056             $2.787

Yesterday Avg.           $2.527             $2.806             $3.051             $2.785

Week Ago Avg.          $2.466             $2.754             $3.000             $2.743

Month Ago Avg.         $2.514             $2.799             $3.046             $2.732

Year Ago Avg.            $2.219             $2.486             $2.730             $2.42

Natural gas

Wednesday to Wednesday, prices fell at most locations, while weekly average prices generally increased with colder temperatures across the lower 48 states. This report week (Wednesday, Oct. 25, to Wednesday, Nov. 1), the Henry Hub spot price fell 29 cents from $2.93/MMBtu last Wednesday to $2.64/MMBtu yesterday, while the weekly average price decreased 3 cents from $2.84/MMBtu last report week to $2.81/MMBtu this report week.

Temperatures across the lower 48 averaged four degrees higher than NOAA's 30-year normal last report week, but averaged two degrees lower than normal this report week.

At the New York Mercantile Exchange, the November 2017 contract expired Friday at $2.752/MMBtu. The December 2017 contract price decreased to $2.893/MMBtu, down 19 cents Wednesday to Wednesday.

Net injections to working gas totaled 65 billion cubic feet for the week ending Oct. 27. Working natural gas stocks are 3,775 Bcf, which is 5 percent less than the year-ago level and 1 percent less than the five-year (2012–16) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 33 cents, averaging $8.28/MMBtu for the week ending Nov. 1. The prices of natural gasoline, ethane, propane, butane, and isobutane all rose, by 6, 3, 6, 1 and 1 percent, respectively.

According to Baker Hughes, for the week ending Friday, Oct. 27, the natural gas rig count decreased by five to 172. The number of oil-directed rigs rose by one to 737. The total rig count decreased by four, and now stands at 909.

Overall demand rises at this time of year largely because of increased residential consumption and colder temperatures. Total U.S. consumption of natural gas rose 14 percent compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation declined 8 percent week over week.

Industrial sector consumption increased 5 percent week over week. In the residential and commercial sectors, consumption increased 73 percent as the weekly average U.S. temperature decreased 9 degrees from 60 degrees last report week to 51 degrees this report week.

Pizza company stocks

Last week's winners on the trading floor were Pizza Hut parent Yum brands and Papa Murphy's, which showed nice price increases over the course of the five days.

Yum! Brands Inc. shares increased in value from $75.18 to $78.91, while take-and-bake brand, Papa Murphy's increased in value from $5.45 to $5.66 between the close of trading from Oct. 27 to Nov. 3.

On the other hand, Papa John's and its NFL-bashing CEO took a hit after his comments last week. Schnatter blamed poor domestic financial numbers in Q3 on the NFL and its handling of recent player protests. He claimed in public comments that his company's ads and sponsorship with the league hurt the brand with consumers.

The backlash in both traditional and social media was swift and strong, as the brand's stock price fell from $68.30 to $61.47 from Friday, Oct. 27, to Friday, Nov. 3.

Domino's also had a rough week, without a public peep from its CEO. That brand's stock price fell from $184.68 on Friday, Oct. 27, to $177.94 on Friday, Nov. 3, at the close.

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.