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National infrastructure issues wreak havoc with wheat, gas prices

A bridge crack in Tennessee and a major Eastern gas pipeline infrastructure attack last week are hitting pizzeria owners in the pocketbook this week, as vital commodities are stymied on their path to market.

Photo: iStock.

May 17, 2021 by S.A. Whitehead — Food Editor, Net World Media Group

U.S. infrastructure issues have led to price increases for everything from natural gas to wheat over the last week, though lower cheese prices and rapid repair work are providing some glimmers of a silver lining. Unfortunately, trading prices for most major publicly-traded pizza brands failed to play along, with three of four pizza companies monitored here weekly showing a dip in stock value last week.

The loss in value for the week at Papa John's for instance, was $2.70 at the close of trading Friday, when the Kentucky-based brand clocked in at $96.65 at the close of trading. Meantime, Michigander brand, Domino's, the closing stock value rang in at $426.94 Friday, signaling a $5.53 loss in total stock value over the week's trading activity.

Pizza Hut parent, Yum Brands, also faded some over the week, dropping from $121.23 at the close of weekly trading on May 7, to $119.27 at the close on May 14. The only stock monitored here weekly that managed a slight uptick in value last week, was Pizza Inn and Pie Five parent, Rave Restaurant Group, which added 2 cents to its value over the week to close Friday at $1.34.

Cheese
For pizzeria owners, cheese trading brought some encouragement as prices for both barrels and blocks eroded over the week. The average price for barrels over the week fell nearly 7 cents to $1.73, while blocks fell about 1 cent on average to $1.77. Closing prices for each category were $1.73 for barres while 40-pound blocks almost $1.73 Friday.

Helping along those lower prices was a plentiful supply of milk, nationally according to the U.S. Department of Agriculture, which added that discounted spot milk prices in the Midwest have been consistent throughout the year so far, though offers were reportedly quieter last week.

Demand is mixed throughout the country, the U.S.D.A. reported. Foodservice customers, in some cases, have refilled their once-depleted pipelines. Western contacts report steady export interest from Mexican and Asian customers. Cheese inventories are viewed from balanced to available.

Wheat
Wheat prices were also rebounding at the end of the trading week after largely gaining for more than a month. Futures prices trended downward, including Chicago Board of Trade prices for soft red winter futures which were down 46 cents to $7.27 per bushel at the close. On the Minneapolis Grain Exchange, hard red spring futures were down 44 cents at the close to $7.45 per bushel, U.S.D.A. showed.

U.S. wheat commercial sales of 30,300 metric tons were below trade expectations of up to 53,783 metric tons, while year-to-date commercial sales for delivery in 2020/21 were 7% lower than last year. The U.S.D.A. anticipates that this year's wheat exports from the U.S. will stand even with the previous year's total of 26.2 MMT.

Contributing to that lower total over the last week was a Memphis, Tennessee bridge problem that closed the thoroughfare which is vital to U.S. grain exports due to a crack in the bridge over the Mississippi River. The span is critical to grain passage en route to and away from the Gulf of Mexico and due to the close hundreds of barges were lined up on either side of the closure waiting passage. The issue is causing some corresponding pricing effects on grain domestically and globally.

Auto fuel
Infrastucture issues are also at the root of some of the nation's auto fuel price increases, thanks to a shutdown at Colonial Pipeline due to a ransomware attack. The line provides gas to the East Coast where some gas stations had to close. But Thursday, the pipeline was back up and running and the American Automobile Association said motorists in the southeast can expect to see fuel flowing more freely soon. Some of the hardest-hit states due to the pipeline closure were Virginia, the Carolinas, Georgia and Tennessee.

"The restart of the pipeline is very positive news for motorists," Jeanette McGee, AAA spokesperson, said in a press release. "While impact won't be seen immediately and motorists in affected areas can expect to see a few more days of limited fuel supply, relief is coming.

"Station pumps will be full of fuel in several days. This is an especially good update ahead of the Memorial Day holiday."

From the time the pipeline was taken offline on Friday until Thursday morning, the national gas price average increased 7 cents, AAA said. That pushed the average to $3.02 this week — the highest average since October 2014. The national average is likely to continue to see fluctuation in the coming days and states where prices have spiked will see some relief as the pipeline becomes fully operational.

This morning the national average price for regular rang in at $3.05, up 8 cents over the week. At 3.38, mid-grade was up also up 7 cents, while at $3.65, premium was up 8 cents in seven days. The price of diesel was $3.17 this morning, a nickel increase over the week, while E85 averaged $2.55 nationally, an increase of just 4 cents over the week.

Natural gas
Natural gas spot price movements were mixed over the seven days that ended on May 12, the last period available from the U.S. Energy Information Administration. The Henry Hub spot price fell from $2.97 per million British thermal units (MMBtu) over the same period.

The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 16 cents/MMBtu, averaging $7.50/MMBtu for the seven days as a result of a 7% decline in propane prices that pulled the average index price down week over week. Reports indicate there was a relatively rapid decline in domestic propane consumption, as well as a return to strong storage builds after six weeks of relatively flat inventories.

The price of ethane rose 1%, as a result of strong demand for ethane feedstock in the petrochemical industry, as prices of ethylene, the basic chemical produced from cracking ethane, remained at close to double last year's average level. Normal butane and isobutane rose by 1% and 2%, respectively, in response to increased blending of butane into gasoline due to EPA's waiver of gasoline RVP limits related to the Colonial Pipeline shutdown. The price of natural gasoline remained flat week over week, in line with crude oil prices, which also remained flat week over week.

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.