Article

Domino's takes a hit from traders, while pizza commodity prices fall

Domino's was the big loser of the Big Three publicly traded pizza brands in trading the last week of September, but all pizza brands got some breaks from commodity prices which generally trended lower.

September 30, 2019 by S.A. Whitehead — Food Editor, Net World Media Group

Domino's took a nasty tumble last week on the stock market last week, where the world's No. 1 pizza company by sales watched its value drop more than $7 over the five days, but fortunately, commodity prices gave all pizza restaurant brands a reason to smile thanks to mainly lower prices paid for those pizza essentials.   

Cheese

Though cheese markets are very active, and in places like the Midwest, milk supplies are getting tighter, the prices paid for the vital pizza commodity on the Chicago Mercantile Exchange last week were generally lower. However, block buyers witnessed some real volatility as markets for those lots dove nearly 30 cents over the week. Barrel prices held mostly steady though. 

Barrels closed at $1.66 and averaged $1.62 for the week, which is down nearly 17 cents on the week. Meantime, 40-pound blocks closed at $1.96 and averaged $1.97, which was off nearly 16 cents. In the Midwest, mozzarella, 5-6 pounds ran $2.30 to $3.24, according to the U.S. Department of Agriculture Market News Service. 

Cheese production remains generally active in the entire country, though Midwestern milk supplies are tighter, ranging from 25 cents to $1.75 over Class. Pizza cheese orders are still healthy, while some cheese-makers suggest recent market highs, and current downward pricing directions, are keeping buyers on the sidelines. 

In the West, stockpiles of mozzarella are substantial, but the USDA contacts in that part of the nation report that seasonal demand from pizza makers has spoken for much of the mozzarella. 

Wheat

Compared to last week, cash bids for wheat were mostly lower, with dark northern spring wheat sharply higher as the Minneapolis dark northern spring wheat market still has quality concerns due to copious amounts of rain recently. 

Wheat ranged from steady to $0.16 lower, with dark northern spring 39 cents to 49 cents higher. Kansas City U.S. No. 1 hard red winter, ordinary protein rail bid, was a penny lower, from $4.83-$4.93 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 16 cents lower at $4.74 per bushel.  Minneapolis and Duluth U.S. No. 1 dark northern spring, 14.0 to 14.5 percent protein rail, was sharply higher at $7.09 per bushel. Portland U.S. soft white wheat rail was steady to 3 cents lower, from $5.88-$5.92 per bushel.

Vehicle fuel

Pump prices continue to stabilize for most motorists, following the release of new data from the U.S. Energy Information Administration showing total domestic gasoline stocks grew by 500,000 barrels to 230.2 million barrels. Imports of gasoline surged 300,000 barrels more per day(b/d) the previous week, boosting the domestic stores of the fuel. 

The American Automobile Association reported that although gas demand rebounded from 8.9 million b/d to 9.3 million b/d last week, growing gasoline stocks have helped force pump prices down after oil prices surged the previous week in response to attacks on two Saudi Arabian oil facilities. Since Monday, the national average for regular unleaded gasoline fell $0.01 to $2.65. Mid-grade and premium remained largely unchanged at $2.99 and $3.25 respectively. However, all those grades are up from last month when, for instance, the price of a gallon of regular was just $2.58. 

Fluctuations for diesel followed that same path, with the average price this morning at $3.02, up a cent from last week, but 9 cents higher than last month. But for E85, the fluctuation was not so marked, with the average price this morning of $2.31, up just a cent from last month. 

Natural gas

Natural gas spot prices fell at most locations for the most recent report week that ended last Wednesday, Sept. 25. Henry Hub spot prices fell from $2.68/MMBtu to $2.51/MMBtu over that same period.

At the New York Mercantile Exchange, the price of the October 2019 contract decreased 14 cents, from $2.64/MMBtu to $2.50/MMBtu yesterday. The price of the 12-month strip averaging October 2019 through September 2020 futures contracts declined 18 cents/MMBtu to $2.51/MMBtu, according to the U.S. Energy Information Administration.

Net injections to working gas totaled 102 Bcf for the week ending Sept. 20. Working natural gas stocks are 3,205 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, rose by $0.06/MMBtu, averaging $5.05/MMBtu for the week ending Sept. 25. The price of ethane fell by 9%. The price of natural gasoline, propane, butane, and isobutane rose by 1%, 1%, 2%, and 21%, respectively. Isobutane's premium to butane is the highest since June 2018.

According to Baker Hughes, for the week ending Tuesday, Sept. 17, the natural gas rig count decreased by five to 148. The number of oil-directed rigs fell by 14 to 719. The total rig count decreased by 18, and it now stands at 868.

Pizza company stocks

Color the last week of September a deep red for Domino's, which saw the value of its stock drop $7.16 over the course of the five days to close Friday at $240.46. Slightly lighter on the color scale, but still red, were the folks at Papa John's, who also took a hit, though much smaller, last week when their stock closed at $51.84, down 21 cents from the previous week's close. 

On the flip side of the proverbial color chart, Pizza Hut parent, Yum Brands, Inc. gleamed a very positive green last week, when the value of its stock bumped up 69 cents over the last week's close to clock in at $112.99 Friday, making it the only winner of the Big Three on the trading floor at the close of September. 

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.