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Papa John's only trading winner last week, as gas use dips to lowest in 27 years

Gas demand hit the lowest level the markets have seen since 1993 last week, while cheese market inventories stack up as dairy farmers throw milk away amidst ebbing demand. The only real bright spots last week were in lower gas prices and increased stock values for pizza brand, Papa John's.

Image: iStock

April 6, 2020 by S.A. Whitehead — Food Editor, Net World Media Group

The pains of the pandemic were felt across most pizza brands last week, aside from Papa John's International Inc., whose shares posted an increase by week's end. The company — which has certainly weathered its share of storms in the past involving its controversial founder — last week managed to rise when most of the rest of the nation's publicly traded brands struggled amid COVID-19-fueled fears. 

Papa John's share prices reached $52.58, after the company reported an increase in same-store sales rose at its North American locations and the stock was later upgraded by MKM Partners. 

Meanwhile, the two other major pizza brands saw shares fall slightly, beginning with Ann Arbor, Michigan-based, Domino's which lost $20.14 on the week to close at $328.23 Friday. 

At multi-QSR company and Pizza Hut parent, Yum Brands, shares fell $5.23 to $63.30, compared with $68.53 the previous Friday. Meanwhile, Rave Restaurant Group fell to 59 cents Friday. The Pie Five and Pizza Inn parent company lost another 21 cents over the week's trading from the previous Friday's close of 80 cents.

Lowest weekly gas demand in 27 years

The American Automobile Association reported that last week, its national data indicates that gas demand dropped precipitously last week, hitting its lowest demand level since 1993. According to the U.S. Energy Information Administration demand fell from 8.8 million barrels a day to 6.7 million barrels per day last week as social distancing and stay-at-home orders keep more motorists off the road. 

Over the week, the national average for a gallon of regular gasoline fell 6 cents to $1.95, with at least 33 states reporting average prices per gallon that are under $2. Likewise, the EIA reported that domestic crude prices (through West Texas Intermediate) increased from $20.31 to $25.32 per barrel late last week amid reports of Saudi Arabia and Russia reaching a truce on their crude oil price war. Although the announcement helped lift prices, crude prices are expected to remain low as the global impact of COVID-19 continues to increase.

States with the largest dips in their averages over the last week include Montana (-18 cents), Wisconsin (-17 cents), Vermont (-16 cents) and Alaska. Those states were followed by 12-cent drops in Oklahoma, Arkansas and Iowa and 11-cent drops in Kentucky, Idaho and Ohio.

Prices for diesel fell 4 cents over the week to end at an average of $2.57, while E85 was 7 cents lower on the week to a current average of $1.74. 

Cheese prices plummet as milk overflow is discarded 

On cheese markets nationally, prices have also fallen on both blocks and barrels over the last week as demand dwindles just about everywhere but groceries. Barrels closed at $1.14 and 40-pound blocks ended at $1.15 Friday, according to the U.S. Department of Agriculture. 

The weekly average for barrels was off 21 cents at $1.20, while blocks were off 46 cents at $1.30. Meanwhile, the U.S.D.A. reports that cheese inventories keep growing, since even with some plants closing, the milk keeps coming in. 

Milk prices reported were solely discounted, between $4 and $5 under, while reported offers were still lower in price. Restaurant demand has been hamstrung by COVID-19-related closures and retail orders remain steady to slightly lower. The pandemic is creating anxiety among nearly all dairy market participants, and cheese producers are no exception, the U.S.D.A. said, with some loads of milk are being discarded. 

Wheat prices also fall

Compared to last week, cash bids for wheat, were 5 to 58 ¼ cents lower, the U.S.D.A. said. Kansas City U.S. No. 1 hard red winter, ordinary protein rail bid was 58 ¼ cents lower, from $5.49-$5.59 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 43 cents lower at $5.57 per bushel. Minneapolis and Duluth U.S. No. 1 dark northern spring, 14.0 to 14.5 percent protein rail, was 32 1/4 to 42 1/4 cents lower, from $6.29-$6.39 per bushel. Portland U.S. soft white wheat rail was 5 cents lower, from $6-$6.10 per bushel.

Natural gas drop

Natural gas spot prices fell at most locations for the latest report week that ended on April 1. The Henry Hub spot price fell from $1.71 per million British thermal units (MMBtu) to $1.60/MMBtu over the same period. 

At the New York Mercantile Exchange (Nymex), the April 2020 contract expired Friday at $1.63/MMBtu, down 3 cents/MMBtu from the previous week. The May 2020 contract price decreased to $1.59/MMBtu, down 13 cents/MMBtu over the week. The price of the 12-month strip averaging May 2020 through April 2021 futures contracts declined 2 cents/MMBtu to $2.214/MMBtu.

The net withdrawal from working gas totaled 19 billion cubic feet (Bcf) for the week ending March 27. Working natural gas stocks total 1,986 Bcf, which is 77% more than the year-ago level and 17% more than the five-year (2015–19) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 10 cents/MMBtu, averaging $2.50/MMBtu for the week. The price of natural gasoline fell by 2%. The prices of propane, ethane, isobutane, and butane, rose by 1%, 6%, 11%, and 18%, respectively.

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.