Article

Domino's takes a dive as gas demand soars to all-time high

National gasoline demand hit an all-time high last week, while Domino's stock value hit close to an annual low.

August 19, 2019 by S.A. Whitehead — Food Editor, Net World Media Group

Domino's is licking its wounds after five particularly nasty days of trading last week on the New York Stock Exchange where the brand's value took a dive. The drop just intensified an already downward trend in value for the pizza powerhouse that has continued throughout this year. 

Meantime, all pizza brands are profiting from relatively low vehicle fuel prices, despite record-high demand in the U.S.. But that might not last since several monitoring agencies say the relatively low level of national gas stocks combined with soaring demand portends higher prices in what could be the near-future. 

Cheese 

At the Chicago Mercantile Exchange last week, cheese barrels closed at $1.77 and 40-pound blocks ended up at $1.88. The weekly average for barrels was up 4 cents to $1.74, while blocks rose a little ore than a cent to $1.88.

The U.S.D.A. Agricultural Market News reports that cheddar block prices on the Chicago Mercantile Exchange last week were nearing $1.90, a price they have not reached since November 2016. Still, even with the higher market prices, cheese demand is strong in the Midwest and East as schools returning from summer have added to food service purchasing. 

Wheat

Compared to last week, cash bids for wheat were 12 3/4 cents to 33 3/4 cents lower, while the wheat crop production forecast was up 3% from last year to 1.98 billion bushels.

Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 33 3/4 cents lower, from $4.79 3/4-$4.89 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 30 to 32 cents lower, from $4.64-$4.71 per bushel.  Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was 12 3/4 to 18 1/4 cents lower, at $5.82 3/4 per bushel. Portland U.S. Soft White wheat rail was 20 cents lower, from $5.55-$5.80 per bushel.

Vehicle fuel

Gas demand nationally is at its highest point since the U.S. Energy Information Administration began keeping data in 1991, reaching a record 9.93 million barrels a day for the week that ended Aug. 9, the agency said. That was, in fact, a nearly 300,000 barrels per day higher than the just the previous week and about 400,000 barrels per day higher than last year at this time. 

According to the American Automobile Association, that demand drained about 1.4 million barrels from gas stores to leave them at 233.8 million bbl. The association said if demand increases this week as stock levels again drop, the nation  could see heftier pump prices just in time for the Labor Day travel weekend. 

As it stands now though gas is still relatively inexpensive and well below the price we paid even one week ago, with the average price of a gallon of regular today at $2.62, AAA said. That's 3 cents less than last week, 16 cents lower than last month and a smile-inducing 22 cents under what we forked over for the same gallon of gas last year at this time. 

That trend continued across mid-grade fuels ($2.95), premium ($3.21) and diesel ($2.95). Prices for E85 were also down, though not nearly as much as that for other gasoline grades. Today, AAA reported that the average per gallon price for the corn-based fuel was $2.30, down 13 cents from last year at this time. 

Natural gas

Natural gas spot price movements were mixed for the latest report week that ended on Wednesday, Aug. 14. The U.S. Energy Information Administration reported that Henry Hub spot prices rose from $2.12 per million British thermal units (MMBtu) to $2.15/MMBtu over that period.

At the New York Mercantile Exchange, the price of the September 2019 contract increased 6 cents, from $2.083/MMBtu last Wednesday to $2.143/MMBtu over that span. The price of the 12-month strip averaging September 2019 through August 2020 futures contracts rose 2 cents/MMBtu to $2.323/MMBtu.

Net injections to working gas totaled 49 billion cubic feet (Bcf) for the week ending Aug. 9. Working natural gas stocks are 2,738 Bcf, which is 15% more than the year-ago level and 4% lower than the five-year (2014-18) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 6 cents/MMBtu, averaging $4.33/MMBtu for the seven days ending Aug.14. The price of propane, butane, isobutane, and natural gasoline fell by 6%, 4%, 4%, and 2%, respectively. The price of ethane rose by 14%.

According to Baker Hughes, for the week ending Tuesday, Aug. 6, the natural gas rig count decreased by two to 169. The number of oil-directed rigs fell by six to 764. The total rig count decreased by eight, and it now stands at 934.

Major U.S. pizza company stocks

As we mentioned at the top of this report, Domino's Pizza, Inc. had a difficult week with investors last week, after a brief rise in its value a week earlier. The brand closed down $12.88 on Friday to settle in at 234.95, one of its lowest points this year. 

But Domino's leadership had commiserating company last week from leadership at Pizza Hut and Papa John's, which both took less lofty dives in value over the period. At Pizza Hut parent, Yum Brands, for instance, stock value stumbled to close at $115.62, off $3.40 from the previous week. 

And at Louisville, Kentucky-based Papa John's, another stock dip occurred as that brand's value dropped to $42.79, down from $46.02 a week earlier. 

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.