Food & Beverage

Domino's, Papa John's, Yum stock prices up ... as are pump prices

Major pizza restaurant companies fared well, for the most part, in trading last week. But their gains in stock prices are being eaten into by increasing losses at the pump, due to soaring gas prices nationally, led last week by the state of Ohio, where average gas prices increased a whopping 21 cents per gallon.

Photo: iStock.

June 14, 2021 by S.A. Whitehead — Food Editor, Net World Media Group

As seemingly ever-growing gas prices continue to take a bite out of the pizzeria operator's pie, there were some positive notes in this week's pizza commodities news in the form of lower wheat prices and higher stock prices paid for three of the four pizza restaurant companies watched by Pizza Marketplace.

That positive investment news starts with the Big Daddy pizza brand itself in Domino's closing price Friday that was $21.82 higher from the previous week to $452.96 Friday afternoon.

At Louisville, Kentucky-based competitor Papa John's investors were also in a "spend-y" mood, ultimately helping to drive up the stock price $7.78 over the previous Friday's close to end at $102.58 at the closing bell on June 11.

Multi-QSR company and Pizza Hut parent, Yum Brands, reversed its downward trend of the previous week, to close this past Friday at $119.65, up 88 cents from the previous week's close. In fact, only Pizza Inn and Pie Five parent Rave Restaurant Group failed to pull off a stock price gain last week, closing Friday down 6 cents from the previous week, at $1.43.

Cheese

Weekly averages paid for cheese at the Chicago Board of Trade last week trended lower than the closing prices for the essential pizza commodity, with barrels closing at $1.67 and 40-pound blocks ending at a flat $1.50. That compares for the weekly averages for each quantity of $1.61 for barrels and $1.48 for blocks.

The U.S. Department of Agriculture reported that nationally, all regions are running generally busy cheese production schedules to keep up with current milk supplies. Retail demand notes vary from slow to busy, with restaurant orders steadying. Western cheese contacts reported that export sales for the commodity have picked up due to the market price drops, though logistical issues with freight/shipping remain a stumbling block.

Cheese market prices are still "inverted" as barrel prices outpace those of blocks. But the U.S.D.A. said block prices are showing some resilience after dropping into the mid $1.40s midweek.

Wheat

Wheat was lower — in some case markedly so — across the U.S. last week, with drought increasingly threatening production. On the Chicago Board of Trade, soft red winter wheat closed down 7 cents to $6.80 per bushel, while September soft red winter wheat futures fell nearly a nickel to $6.85. September Kansas City hard red winter futures were also down nearly a nickel cents to $6.44, while on the Minneapolis Grain Exchange Friday, September spring wheat futures fell nearly 17 cents to $7.65.

The National Oceanic and Atmospheric Administration report that the threat that "severe" drought and heat will expand across the upper Midwest is lingering in Michigan and Wisconsin, as well as northern Illinois, Iowa and Minnesota.

Auto fuel

With this coming Saturday marking the official start of summer, travel season is upon us and pizza operators will join the seasonally wandering public in their newfound, but very realistic, fears of ever-growing pump prices. Just over the last business week, the national average for a gallon of regular grew 2 cents to a somewhat breath-taking average nationally of $3.07.

But in this case those increases have happened despite the fact that demand for gas to this point has actually dropped from 9.15 barrels per day (b/d) to 8.48 million b/d. Meanwhile, the U.S. Energy Information Administration said that simultaneously total domestic gas stocks increased by 7 million barrels to 241 million barrels. In a typical year, those conditions would push prices lower, but the American Automobile Association said this year's higher crude prices have instead meant that pump prices have grown.

Crude prices crossed the $70 per barrel threshold on Tuesday — a point not seen since mid-October 2018. Crude prices have increased due to optimism that vaccine rollout will continue to help crude demand recover and after the U.S. Consumer Price Index showed that prices increased by 5% in May compared to last year, a larger increase than expected, AAA said. The new report is fanning market concerns that inflation is driving prices higher.

Likewise, crude prices have been bolstered by the latest federal report showing that total domestic crude supplies decreased by 5.2 million barrels to 474 million barrels last week. If domestic crude prices remain high, AAA said that American drivers — including those working to bring pizza commodities to restaurants and deliver pizzas to customers — will likely continue to see pump prices fluctuate through the end of the month.

This morning the national average for a gallon of regular was $3.08 or about 4 cents higher than a month earlier, AAA said. Mid-grade ($3.43) and premium gas ($3.70) were both up 7 cents over their averages a month earlier. Diesel fuel average $3.22 this morning up 6 cents on the month, while at $2.59, E85 fuel was up just 4 cents for the same period.

Nationally, the list of the highest prices paid for fuel was topped by Ohio, where prices grew 21 cents on average per gallon. That was followed by prices in Colorado (up 19 cents) and Tennessee (up 17 cents).

Natural gas

Natural gas spot prices rose at most locations for the seven-day period that ended on June 9, as significantly warmer-than-normal temperatures across most of the country — aside from the West Coast — increased air conditioning demand causing more natural gas demand for power generation. The Henry Hub spot price rose from $3.05 per million British thermal units (MMBtu) to $3.10/MMBtu at the end of the period, according to the U.S. Energy Information Administration.

The price of the July 2021 NYMEX contract increased 5 cents, from $3.075/MMBtu to $3.13/MMBtu over the period. The price of the 12-month strip, averaging July 2021 through June 2022 futures contracts, climbed 6 cents/MMBtu to $3.11/MMBtu.

The price of ethane increased by 2%, while the prices of propane and natural gasoline both rose 3%. Prices of butanes rose the most. The weekly average normal butane spot price increased by 8%, and the price of isobutane rose 7%.

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.