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In trading, March comes 'in like a lion' for Domino's

In weather lore, March skies that come "in like a lion" are assured to go "out like a lamb," but it remains to be seen whether that same forecasting axiom holds true for investment markets since the month did come in negatively for pizza powerhouse, Domino's.

March 4, 2019 by S.A. Whitehead — Food Editor, Net World Media Group

With gas prices again nearing year-ago price levels and wheat prices also inching up, March rolled in a bit like that proverbial "lion," particularly for two of the larger publicly traded brands — Domino's and Pizza Hut — both of which saw their parent companies lose value in trading last week. 

Cheese

In cheese trading last week barrels again slid down in value, while 40-pound blocks gained over the week's trading. Barrels averaged and closed at $1.41, off nearly a cent on the week, according to the U.S.D.A. However, 40-pound blocks traded higher on the week, averaging and closing at $1.61, up a penny for that period. 

Cheese production continued at or near capacity in most of the U.S., though both Midwestern and Western cheesemakers were shifting production down whenever possible to limit inventories, the U.S.D.A. said. Also, both Midwestern and Western processors are shifting production varieties in order to control stores of specific varieties. 

Cheese producers in the Central U.S. reported weather-related issues with trucking particularly longer hauls. Demand is mixed generally, but some Midwestern cheese contacts relay higher market prices and typical seasonal slowdowns are teaming up to create slower sales. Nonetheless, cheese market tones remain firm compared to most of the past half-year.

Wheat

Compared to last week, cash bids for wheat were generally lower, ranging from 35 cents lower to 17 cents higher, according to the U.S.D.A. Export sales for the seven days ending Feb. 21, totaled 17.5 million bushels. 

Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 3 3/4 to 5 3/4 cents lower, from $5.61 1/2-$5.74 1/2 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 34 to 35 cents lower, at $4.83 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was 16 1/2 to 17 1/4 cents higher at $7.19 1/4 per bushel. Portland U.S. Soft White wheat rail was steady to 5 cents lower, from $6.15-$6.35 per bushel.

Vehicle fuel

Domestic crude inventories saw a major drawdown last week, which the American Automobile Association attributed to very healthy crude export rates. That may be among the reasons that U.S. gas prices are steadily inching upward and now stand at less than 10 cents away from last year's price averages. Likewise, diesel and E85 fuel prices have already exceeded last year's averages. 

Today, the average price of a gallon of regular was $2.43, up 17 cents from last month and approaching the $2.53 we paid this time last year. Mid-grade ($2.73) and premium gas ($2.98) followed suit as both began to approach the prices they posted last year at this time. 

Diesel fuel, however, has already eclipsed last year's price, coming in at $2.99 a gallon today, 4 cents higher than last year's price at this time. Likewise, E85 came in at $2.17 this morning, up a nickel a gallon from last year's price of $2.12 at this time. 

Natural gas

Natural gas spot prices rose at most locations for the seven days ending Wednesday, Feb. 27, according to the U.S. Energy Information Administration. Henry Hub spot prices rose from $2.71/MMBtu to $2.85/MMBtu over that same period. 

At the Nymex, the March 2019 contract expired Feb. 26 at $2.855/MMBtu, up 22 cents/MMBtu from the previous week. The April 2019 contract increased to $2.799/MMBtu, up 13 cents/MMBtu for the seven-day period. The price of the 12-month strip, averaging April 2019 through March 2020 futures contracts, climbed 9 cents/MMBtu to $2.938/MMBtu.
Net withdrawals from working gas totaled 166 Bcf for the seven days that ended Feb. 22. Working natural gas stocks are 1,539 Bcf, which is 9 percent lower than the year-ago level and 22 percent lower than the five-year (2014-18) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 2 cents/MMBtu, averaging $6.78/MMBtu for the seven days ending Feb. 27. The price of ethane, butane, and isobutane fell by 1, 5 and 5 percent, respectively. The price of natural gasoline and propane rose by 2 and 4 percent, respectively.

According to Baker Hughes, for the week ending Tuesday, Feb. 19, the natural gas rig count remained flat at 194. The number of oil-directed rigs fell by four to 853. The total rig count decreased by four as well, and now stands at 1,047.

Pizza company stocks

Domino's continued its price freefall last week on the New York Stock Exchange, where the brand traded down $9.58 over the week to close Friday at $250.73. Meanwhile, Yum Brands, parent of competitor its competitor, Pizza Hut, also dropped in value, though by just a mere 2 cents over the week's trading to close Friday at $95.37. 

Gainers on the week include the category's two Nasdaq-traded brands, Papa John's and Papa Murphy's. In Papa John's case, the brand gained $1.50 over the week's trading to close Friday at $43.32, while the smaller Papa Murphy's chain got a nice lift from investors, closing up 36 cents on the week at $5.69.

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.