Article

Papa John's only winner in trading last week

Pizza commodity prices trended higher last week, even as traders on Wall Street pulled back their support for all but one of the publicly traded pizza restaurant companies monitored here weekly.

Newton, North Carolina Papa John's store. (Photo: J. Michael Jones for iStock)

October 21, 2019 by S.A. Whitehead — Food Editor, Net World Media Group

In trading this week, Papa John's was the lone brand among the Big Three publicly traded chains to report some gains last week. Meanwhile, cheese markets are getting more stable and gas is getting more costly. 

Cheese

Cheese production continues at steady to active rates in the United States. Milk bound for cheese vats is limited in the Midwest, as more milk loads head southeast into bottling and processing plants. Hence, the $.75 to $1.50 premiums on spot milk loads in the Central region, the U.S. Department of Agriculture said. 

Market prices are hindering cheese demand. A growing number of Class III producers report $2-plus market prices have buyers opting to purchase for short-term requirements exclusively. Still, even with some ups and downs on Chicago Mercantile Exchange (CME) market prices, both cheese blocks and barrels made their way above $2 this week. Also, block and barrel prices have nearly converged, which is generally viewed as an indicator of market stability.

Friday's closing price for barrels on the CME was $2, compared to $2.02 one week previous. CME blocks' closing price was $1.97, compared to $2.10 just seven days earlier. 

Wheat

Compared to last week, cash bids for wheat were higher with dark Northern spring wheat sharply higher, the U.S.D.A. said. Wheat export sales showed an increase of 14.5 million bushels for 2019-20.

Wheat was 5 to 33 cents higher with dark Northern spring coming in 46 3/4 to 51 3/4 cents higher. Kansas City U.S. No. 1 hard red winter, ordinary protein rail bid, was 18 cents higher, from $5.01 1/4-$5.11 1/4 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 33 cents higher at $5.11 per bushel. Minneapolis and Duluth US No. 1 dark northern spring, 14.0 to 14.5% protein rail, was 46 3/4 to 51 3/4 cents higher, from $6.72-6.77 per bushel. Portland U.S. Soft White wheat rail was 5 to 8 cents higher, from $6.03-$6.05 per bushel.

Vehicle fuel

The rule of supply and demand was in effect last week at the gas pump, where prices were rising as gas stock fell. The U.S. Energy Information Administration showed that total domestic gasoline stocks fell by 2.6 million bbl to 226.2 million bbl. When compared to last year at this time, total domestic stocks are 8 million bbl lower this year. 

The American Automobile Association reports that although demand took a slight step back from 9.46 million b/d to 9.35 million b/d, the Energy Information Administration still reports that demand is 172,000 b/d higher than last year's rate at this time. 

As a result, until supplies increase or demand decreases, motorists are likely to see moderate increases in pump prices. This morning the average price being paid for a gallon of regular was about a cent higher than last week at $2.65, which was still about 2 cents lower than last month at this time. Mid-grade ($3), premium ($3.26), diesel ($3) and E85 ($.340 all followed that same general trend. 

Natural gas

Natural gas spot prices rose at most locations for the latest week reported, ending on Oct. 16. Henry Hub spot prices rose from $2.22 per million British thermal units (MMBtu) to $2.25/MMBtu over that same period. 

At the New York Mercantile Exchange, the price of the November 2019 contract increased 7 cents, from $2.234/MMBtu to $2.303/MMBtu. The price of the 12-month strip, averaging November 2019 through October 2020 futures contracts climbed 1 cent/MMBtu to $2.377/MMBtu.
Net injections to working gas totaled 104 billion cubic feet (Bcf) for the seven days ending Oct. 11. Working natural gas stocks are 3,519 Bcf, which is 16% more than the year-ago level and equal to the five-year (2014-18) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 16 cents/MMBtu, averaging $5.28/MMBtu for the seven days ending Oct. 16. The price of ethane fell by 4%. The price of natural gasoline and propane rose by 5%, and the price of butane and isobutane each 4%.

According to Baker Hughes, for the seven days that ended Oct. 8, the natural gas rig count decreased by one to 143. The number of oil-directed rigs rose by two to 712. The total rig count increased by 1, and it now stands at 856.

Pizza company stocks

Papa John's was the only gainer among the big three publicly traded pizza brands last week, settling in Friday at the close at $54.53, up $1.33 from the previous week's close.

Meanwhile, competitor, Domino's continues to have a tough time with traders, closing Friday at $255.70, down from $257.78, the previous week's close. Pizza Hut parent, Yum Brands also took a hit, dropping $2.12 in value from the previous week's close of $114.42.

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.