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Commodity prices rise amidst a week of restaurant turmoil

Amidst a week of bankruptcy announcements and less-than-rosy financial news across the restaurant industry, increasing commodity prices only rubbed salt in the wound last week. Pizza stocks reflected that foggy picture, with half of the brands monitored by this website making gains on the week, and the other half tumbling in value.

October 17, 2016 by S.A. Whitehead — Food Editor, Net World Media Group

Amidst a week ofbankruptcy announcements and less-than-rosy financial news across the restaurant industry, increasing commodity prices only rubbed salt in the wound last week. Pizza stocks reflected that foggy picture, with half of the brands monitored by this website making gains on the week, and the other half tumbling in value. 

Cheese
Cheese prices — which have been a source of encouragement for pizza restaurateurs since late summer — looked, for most of the week, to remain in that downward trend. But just as the week closed out in cheese trading on Friday, the price of the commodity jumped up more than 3 cents in Friday trading, returning the average price for this essential pizza ingredient back to its value of $1.55 at the previous week' close. 

Wheat
Wheat, like most other grains last week, trended upward in price as well last week, supported by favorable export loadings, as well as weather concerns in South America, according to the U.S. Department of Agriculture.

Kansas City U.S. No. 1 Hard Red Winter — ordinary protein rail bid — was 9 to 18 cents higher, from $4.02 to $4.73 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 33 cents higher at $3.94 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring — 14 to 14.5 percent protein rail — was 7¼  to 17¼ cents higher, from $6.47 to $6.62 per bushel. Portland U.S. Soft White wheat rail was steady to 11 cents higher, from $4.50 to $4.86 per bushel.

Gasoline and diesel fuel
Vehicle gas prices were about a penny lower than last week, but diesel fuel increased about 2 cents on the week per gallon. Regular unleaded was averaging around $2.24 this morning, while mid-grade was slightly higher than $2.50 a gallon and premium was slightly higher than $2.74. All gas price averages are about a penny lower than last week's prices, but still about 2 cents lower than this time last year. Diesel fuel, on the other hand, jumped to $2.42 Monday, up from $2.40 a week ago, but still about a dime lower than this time last year per gallon. 

Natural gas
Natural gas prices went along with that upward trend, with spot prices at most locations up. The Henry Hub spot price rose from $2.86 per million British thermal units (MMBtu) last Wednesday to $3.17/MMBtu yesterday. At the Nymex, the price of the November 2016 contract increased 17 cents, from $3.041/MMBtu last Wednesday to $3.210/MMBtu yesterday. The price of the 12-month strip averaging November 2016 through October 2017 futures contracts climbed 13 cents to $3.312/MMBtu.

Net injections to working gas totaled 79 billion cubic feet (Bcf) for the week ending Oct. 7. Working natural gas stocks are 3,759 Bcf, which is 2 percent greater than the year-ago level and 5 percent greater than the five-year (2011–15) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 46 cents, closing at $5.91/MMBtu for the week ending Oct. 7. The prices of natural gasoline, ethane, propane, butane, and isobutane all rose, increasing by 9, 12, 7, 5 and 9 percent, respectively. 

According to Baker Hughes, for the week ending Friday, Oct. 7, the natural gas rig count decreased by 2 to 94. The number of oil-directed rigs rose by three to 428. The number of miscellaneous rigs went up by one during the week. The total rig count climbed by two, and now stands at 524. 

Prices rose nearly everywhere for the report week of Oct. 5 to Oct. 12. The Henry Hub spot price rose 31 cents from $2.86/MMBtu last Wednesday to $3.17/MMBtu yesterday. Despite the high levels of natural gas storage stocks, prices seem to be elevated on increasing demand, which may be related to a cold front moving south across the Canadian border, as well as to overall higher levels of electric-sector demand for natural gas this year. 

Pizza company stocks
Pizza stocks were split over the week, with brands like Domino's and Papa John’s gaining on the week, while parent of the Pizza Hut brand, Yum Brands, and smaller take-and-bake chain, Papa Murphy's, both losing value.  

Domino's saw the biggest overall increase in value, up 81 cents at the close to $151.12. Papa John's also increased in value on the week to $77.97 at the close, up 31 cents on the week. 

The news was not so good for Pizza Hut parent company, Yum Brands, which lost about 19 cents on the week to close at $89.18 Friday. The smaller brand, Papa Murphy's also lost about 11 cents in trading last week to close at $6.09. 

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.