Delivery

Gulf Coast 's wicked weather grabs up pizzerias' gas cash

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Photo: iStock

February 22, 2021

With mass quantities of snow in places as far south as Texas, last week left a lot to be desired for many Americans, including pizza restaurateurs. Pizza commodity prices and restaurant company trading held little in the way of pleasantries as prices for fuel and wheat trended higher and stock prices dipped.

At Ann Arbor, Michigan-based Domino's, the share value fell $14.16 over the course of the trading week to land Friday at $371.46. Stock for Louisville-based Papa John's International Inc. fell from $108.97 to $103.68 over the week's trading activity — a loss of $5.29 over the five trading days.

Fellow Louisville-based restaurant company, Yum Brands — parent of Pizza Hut — dipped 39 cents to close at $105.13, and the news wasn't much better for Pizza Inn and Pie Five parent, Rave Restaurant Group. Its stock, which was up to $1.70 the previous week, finished Friday at $1.40.

Cheese

In Chicago cheese trading last week, average prices for both barrels and blocks took a tumble, with barrel averages down nearly 6 cents on average to $1.44, while blocks averaged nearly 7 cents lower at $1.44. Barrels closed at $1.41, while 40-pound blocks ended up at just under $1.54.

The U.S. Department of Agriculture reports that nationally, milk remains ample for cheese production, which the organization qualified as currently being somewhat busy.

Cheese demand notes are somewhat steady, the U.S.D.A. said with restaurant sales remaining largely mixed. However, some easing of restaurant restrictions lately, related to COVID-19, has curd producers reporting heartier orders in recent weeks. The U.S.D.A.'s eastern industry contacts report that inventories of fresh supplies are edging higher, though the department adds that cheese market tones will be somewhat vulnerable in recent weeks.

As market impacts from COVID-19 approach the one-year mark, U.S.D.A. said that overall foodservice cheese purchasing has not fully recovered. Additionally, questions regarding governmental awards and ample milk availability are weaving a thread of uncertainty throughout the cheese narrative, U.S.D.A. said.

Wheat

Prices on spring wheat were moderately higher last week, while winter wheat prices trended lower. March Minneapolis Grain Exchange spring wheat futures added about 3 cents to come in at $6.35. In Chicago and Kansas City, March winter wheat prices fell, down nearly 10 cents on soft red winter wheat in Chicago to $6.53, and nearly 4 cents on hard red winter wheat in Kansas to $6.33.

The 2021/2022 U.S. wheat harvest is expected to be in line with projections of an estimated $1.826 billion bushels, the U.S.D.A. said.

Auto fuel

If the pizza restaurant industry was asked where it hurts this week, the answer might be gas prices. The cost of this key business commodity has been steadily rising in recent weeks, but snowy weather in the nation's key oil-producing states around the Gulf of Mexico is making that pricing situation worse, according to national sources.

Since Monday, the national average for a gallon of regular gasoline has increased 7 cents to $2.57, which the American Automobile Association said is resulting from major Gulf Coast refineries being impacted by winter storms. In fact, until refineries resume normal operations, supply is expected to remain tight in impacted areas, especially with road conditions and power outages reducing fuel deliveries. The only good news is that temperatures not only warmed over the weekend, but are expected to remain higher in those key areas in coming days.

According to the U.S. Energy Information Administration total domestic crude inventories dropped by 7.3 million barrels last week, bringing the supply level to 461.8 million barrels As crude inventories decline, crude prices are likely to continue increasing while pushing pump prices higher. That has particularly been the case in Michigan, where gas prices rose an average of 20 cents a gallon last week — the most of all states nationally. In Maryland and Arizona, pump prices rose 14 cents a gallon over that period, while the price grew an average of 13-cents-per-gallon in Delaware.

Currently, the average price of a gallon of regular unleaded is $2.64, AAA said. That's 13 cents more than a week ago and 24 cents higher than last month at this same time. In fact, it surpassed last year's price of $2.47 per gallon by 17 cents, proving those heady days of lower gas prices businesses enjoyed for much of the last several months may be behind us for a while. The average price of mid-grade was $2.95 and premium was $3.22, both 12 cents more than the previous week per gallon.

Diesel fuel averaged $2.85, up 9 cents on the week, while E85 was $2.31, up 12 cents on the week.

Natural gas

According to the U.S. Energy Information Administration, natural gas spot prices also rose at most locations last week, as a response response to record-breaking low temperatures across most of the Lower 48 states, and production losses as far south as the Gulf Coast. The Henry Hub spot price rose from $3.68 per million British thermal units (MMBtu) to $23.61/MMBtu for the latest seven-day period tracked that ended on Feb. 17. That is the highest nominal price since 1993, the administration said. In real terms (adjusted for inflation), yesterday's price is the highest price since February 2003.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 25 cents/MMBtu, averaging $7.66/MMBtu for the week ending Feb. 17. The prices of natural gasoline and isobutane rose by 2% and 1%, respectively. The price of normal butane remained flat week over week. The average weekly ethane price rose 6% on the back of rising natural gas prices, while the propane price rose 4% on growing heating demand. The propane price at Mont Belvieu is now highest since October 2018.