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Commodity trading hands some pre-Independence Day 'duds' to pizza operators

You might call last Friday the "Day of the Dud" for pizza operators, after they watched the price for their needed restaurant commodities like wheat and cheese grow all week long.

July 1, 2019 by S.A. Whitehead — Food Editor, Net World Media Group

The last week of June fizzled like a firecracker in the rain for many pizza brand leaders, who saw cheese, wheat, and auto fuel all increase in price. Fortunately, for the majority of brands monitored here, stock prices also pushed up last week.  

Cheese

From the West, The U.S.D.A.'s Dairy Market News reports that cheese producers and handlers have been noting a strong demand from Mexican and Asian buyers, thanks, in part, to tariff reductions in Mexico. Eastern sources reported a similar climb in demand, though in the Midwest, reports were more mixed after weeks of positive demand. 

The U.S.D.A. also noted that although milk prices are often below Class, they remain relatively pricey for this time of year. But, production is running apace in all regions, although Western cheese plant managers indicated that they may pump the brakes, as temperatures in large areas are reaching more than 100 degrees, which has put a squeeze on milk supplies. 

But overall, cheese market tones held their own, with the price for barrels moving ever upward and closer to block prices, the U.S.D.A. said. Friday's closing price for barrels on the Chicago Mercantile Exchange was $1.79, compared to $1.74 last week. CME blocks closed at $1.86 compared to 1.83 the previous Friday. 

Wheat

Compared to last week, cash bids for wheat were mostly higher, ranging from unchanged to 14 cents higher. Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 8 cents higher, from $5.73 1/2-$5.83 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 11 to 14 cents higher, from $5.72-$5.73 per bushel.  Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was not quoted. Portland U.S. Soft White wheat rail was steady, from $5.75-$6.30 per bushel.

Vehicle fuel

The U.S. Energy Information Administration said that a recent extremely large draw of some 12.8 million barrels of domestic crude inventories increased domestic crude oil prices, which could — if sustained -— lead to higher pump prices later this summer, according to the American Automobile Association. That fact, combined with the massive fire that has shut down the largest East Coast oil refinery in South Philadelphia for the next month and high demand for fuel over the Independence Day holiday could push pump prices up for a while. 

As it stands now, the price for a gallon of regular is up 6 cents from last week to $2.72, but still a dime below last month and slightly more below last year's average at this time of $2.85. Mid-grade ($3.04) and premium ($3.29) followed the upward trend, though not as dramatically.

Diesel was up just a cent over last week, at $3, while E85 pushed up 4 cents over last week's price of $2.34, though both types of fuel were still below last year's price per gallon of $3.17 for diesel and $2.41 for E85. 

Natural gas

Natural gas spot prices fell at most locations for the seven days that ended on Wednesday, June 26, according to the U.S. Energy Information Administration. Henry Hub spot prices fell from $2.36 per million British thermal units (MMBtu) to $2.32/MMBtu June 26. 

At the New York Mercantile Exchange, the July 2019 contract expired at $2.29/MMBtu, up 2 cents/MMBtu over the seven days. The August 2019 contract remained unchanged over that period, at $2.268/MMBtu. The price of the 12-month strip averaging August 2019 through July 2020 futures contracts declined 1 cent/MMBtu to $2.446/MMBtu.

Net injections to working gas totaled 98 billion cubic feet (Bcf) for the seven days that ended on June 21. Working natural gas stocks are 2,301 Bcf, which is 11% more than the year-ago level and 7% lower than the five-year (2014-18) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 30 cents/MMBtu, averaging $4.50/MMBtu for the seven days ending June 26. The price of isobutane, natural gasoline, butane, and propane rose by 19, 10, 9 and 7%, respectively. The price of ethane fell by 2%.

Large publicly traded U.S. pizza companies 

Domino's Pizza took another dive in price during trading on the New York Stock Exchange last week, falling $2.05 in value over the week to close at $278.28 Friday. But for the parent companies of its competitors, Papa John's and Pizza Hut, the companies headed into Independence Day Week trading with a little more "meat" on their bones, with Pizza Hut parent, Yum Brands plumping up another 40 cents in value Friday from the previous week, to close at $110.67.

Meanwhile at the re-emerging Papa John's brand, investors put another 35 cents on the pizza stock last week on the Nasdaq, where the brand closed Friday at $44.72.

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.