Article

Domino's, Pizza Hut + cheese prices all up

This week's pizza commodity report reveals a relative oddity in the pizza brand stock values report, while cheese prices trend up, but gas prices show signs of stabilization.

Photo: iStock.

October 7, 2019 by S.A. Whitehead — Food Editor, Net World Media Group

It's a rarity, but last week the No. 1 and No. 2 publicly traded pizza brands, by sales — Domino's and Pizza Hut parent, Yum Brands — both gained the exact same dollar amount in value on the stock markets. Meanwhile, cheese prices scaled up, though pump prices appear to be stabilizing, weeks after that attack on Saudi oil facilities. 

Cheese

Cheese markets trended higher last week on the Chicago Mercantile Exchange, where barrels added about 13 cents for an average price last week of $1.75. Barrels closed at $1.79 on Friday. Meanwhile, 40-pound blocks were up 3 cents over the previous week's average price, coming in this week at an average of $1.99, the same number blocks closed at Friday, according to the U.S. Department of Agriculture Market News Service. 

Cheese production nationwide is steady to active, though some Midwestern producers say tight milk supplies are lower their production rates. Meanwhile, mozzarella inventories are up in the West, but clearing through pizza markets. In fact, some USDA Midwestern cheese contacts expect demand to remain strong into early 2020. 

Cheese market tones overall rebounded after a bearish week. There is still a large gap between block and barrel prices, but block prices are hovering around $2 and barrel prices have adjusted in bullish fashion compared to a week ago. Nationally, domestic prices for pizza staples, like Parmesan, and Romano are trending down about 16 cents from a week ago. 

Wheat

Cash bids for wheat were mixed, ranging from 3 cents lower to 2 cents higher in trading last week. Dark northern spring wheat, however was sharply lower, with Minneapolis and Duluth U.S. No. 1 dark northern spring, 14.0 to 14.5 percent protein rail, down 97 1/4 to 99 1/4 cents last week, with the price ranging from $6.09 1/2- $6.11 1/2 per bushel.

Kansas City U.S. No. 1 hard red winter, ordinary protein rail bid was 2 1/2 cents higher, from $4.85 3/4-$4.95 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 1 cent lower at $4.73 per bushel. Portland U.S. Soft White wheat rail was 2 to 3 cents lower, from $5.85-$5.90 per bushel.

Vehicle fuel

U.S. gas demand is falling right along with the leaves in most of the nation, with demand dropping in the last week of September from 9.34 million barrels a day (b/d) to 9.13 million b/d. According to the U.S. Energy Information Administration, that's the same rate seen at the end of September 2018. 

Alongside the drop in demand, gasoline stocks held relatively stable from 230.2 million barrels (bbl) to 230 million bbl that final week of September. According to the American Automobile Association, the drop in demand amid stable stock levels has helped U.S. drivers see pump prices stabilize or fall after the spike several weeks back after the attack on Saudi oil facilities. 

The national average for a gallon of unleaded regular this morning was even with last week at $2.65, though still about 12 cents higher than last month. But that price can still prompt appreciative smiles from drivers, who were paying nearly 30 cents higher last year at this time when regular averaged $2.91, AAA reported. And that trend in pricing continued across higher gas grades, with mid-grade and premium both also up a cent from last week at $3 and $3.26, respectively. 

Conversely, diesel ($3.26) was down one cent, while E85 ($2.33) was up 2 cents over the previous week. But again with these fuels, those prices were as much as 22 cents lower than the price we paid last year at this time. 

Natural gas

Natural gas spot prices fell at most locations for the seven-day period ending Oct. 2, with Henry Hub spot prices down from $2.51 per million British thermal units (MMBtu) to $2.30/MMBtu over those days, according to the U.S. Energy Information Administration.

At the New York Mercantile Exchange, the October 2019 contract expired Thursday at $2.428/MMBtu, down 7 cents/MMBtu from the previous week. The November 2019 contract decreased to $2.247/MMBtu, down 27¢/MMBtu over the same period. The price of the 12-month strip averaging November 2019 through October 2020 futures contracts, fell 11 cents/MMBtu to $2.386/MMBtu.

Net injections to working gas totaled 112 billion cubic feet (Bcf) for the last full week of September. Working natural gas stocks are 3,317 Bcf, which is 16% more than the year-ago level and 1% lower than the five-year (2014-18) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 11 cents/MMBtu, averaging $5.09/MMBtu for the seven days that ended on Oct. 2. The price of butane, natural gasoline, and ethane fell by 2%, 3%, and 8%, respectively. The price of isobutane rose by 1%. The price of propane remained flat week over week.

According to Baker Hughes, for the seven days that ended on Sept. 24, the natural gas rig count decreased by two to 146. The number of oil-directed rigs fell by six to 713. The total rig count decreased by eight, and it now stands at 860.

Pizza company stocks

Papa John's was the only one of the three major global publicly traded pizza brands to suffer a loss in value last week. The Louisville-based brand fell $3.44 in price over the trading week, to close Friday at $48.40. 

Meantime, its two publicly traded global pizza competitors, fared better with both Domino's and Pizza Hut parent, Yum Brands, posting the exact same gain in value over the week, of $1.67. That left Domino's at a closing price of $242.13 Friday, while Yum Brands ended the week at $114.66.

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.