Food & Beverage

Pizza investors drive up Big 3 prices

Ah, spring and pizza is in the air ... on Wall Street.

Photo: iStock.

April 12, 2021

Investors "felt like pizza" last week, as all of the major publicly traded U.S. pizza restaurant company names added to their stock values last week. That was tempered by equally higher prices paid for the main pizza commodities, proving the truth in the adage, "You can't have everything."

Big winners in pizza stock trading were more the case than not, with substantial gains across the Big Three of Domino's, Pizza Hut and Papa John's. The Ann Arbor, Michigan-based pizza powerhouse, Domino's, added $16.97 to its stock price over last week's buying and selling to close Friday at $390.35. And that number had already grown another $4 in pre-market trading by shortly after 6 this morning.

Meanwhile, at Pizza Hut parent, Yum Brands, the weekly gains took the company from $109.80 to $114.96 at the close Friday. Fellow Louisville, Kentucky-based pizza competitor, Papa John's, meanwhile, added $7.22 to bring that company's stock value up to $95.70 at the close of trading last Friday.

Then lastly, Pie Five and Pizza Inn parent, Rave Restaurant Group, added a cent over last week, closing Friday at $1.42.

Cheese

As mentioned though, commodities were experiencing their own turn at spring growth, beginning with cheese prices that trended upward on the Chicago Mercantile Exchange last week where the average paid for barrels — $1.58 — was up nearly a dime on the week, while the average paid for blocks gained a nickel to come in at $1.80. Closing prices were even higher, with barrels ending at $1.69, while 40-pound blocks closed at $1.83, according to the U.S. Department of Agriculture.

Cheese plant managers say demand upticks, particularly from the food service sector, are a factor in the increased milk prices. Demand tones from all regions are similar: steady from retail customers to steady/busier on the foodservice side, as more areas ease Covid-19 related dining/public gathering restrictions. Cheese market tones are following demand trends: steadily bullish, according to the U.S.D.A.

Wheat

U.S.D.A. news that worldwide wheat stocks were less than anticipated ended up helping prices for that commodity grow higher last week when May spring wheat futures leapt up nearly 18 cents to $6.58on the Minneapolis Grain Exchange, the department reported. And in Chicago, May soft red winter futures gained 10 cents to come in at $6.39, while Kansas City May hard red winter wheat rose 10 ½ cents to $5.87.

Auto fuel

Americans are moving about more and the gas consumption rate is proving it, along with the prices asked for the vital pizza restaurant commodity in an ultra-low contact world. The American Automobile Association reported that gasoline demand measured 8.9 million barrels per day (b/d) in the Energy Administration's most recent report, up nearly 4% from the week prior. Because of the jump in demand, gasoline supplies tightened to 230.5 million barrels (bbl).

That's the lowest level this year, AAA said. As a result, state gas prices averages saw major fluctuations. On the week, states saw pump price changes ranging from an increase of 15 cents to a decrease of 3 cents, with the latest national average for a gallon of regular up a cent on the week to $2.87, which is 12 cents higher than last month and 94 above year-ago levels.

"We anticipate demand will continue to increase throughout the month as vaccinations become more widely available and weather turns warmer," Jeanette McGee, AAA spokesperson, said in an article about the prices on the association's website. "This will lead to fluctuation at the pump throughout the spring season."

One factor that AAA said may help keep the national gas price average below $3/gallon is the price of crude, which accounts for nearly 60% of the price at the pump. After hitting a 12-month high of $66/bbl last month, crude has been priced mostly at the $60/bbl mark recently.

If it stays low, even with demand increasing, it will contribute to less frequent pump price jumps. However, at the end of last week, crude started to see higher movement following a production announcement by Organization of the Petroleum Exporting Countries Plus.

The biggest weekly changes in gas prices occurred in Ohio (up 15 cents), as well as Michigan and Indiana (up 11 cents) and Wisconsin (up 7 cents). Today, the average price for a gallon of regular was $2.86, down a cent from last week, but up 2 cents from last month. Mid-grade and premium were also a penny lower than last week, though both were up a nickel from last month.

Diesel and E85 fuel were also following that trend of falling a penny in price from the prior week at $3.08 and $2.46 respectively.

Natural gas

Contrary to the other pizza commodities tracked by Pizza Marketplace, natural gas spot prices fell at most locations during the most recent report week that ended April 7 as temperatures moderated across the country. The Henry Hub spot price fell from $2.49 per million British thermal units (MMBtu) to $2.38/MMBtu over the period, according to the U.S. Energy Information Administration.

At the New York Mercantile Exchange, the price of the May 2021 contract decreased 9 cents to $2.52/MMBtu, while the price of the 12-month strip — averaging May 2021 through April 2022 futures contracts — declined 3 cents/MMBtu to $2.75/MMBtu.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 20 cents/MMBtu, averaging $7.61/MMBtu for the period. The prices of butane and isobutane followed crude oil prices down, falling by 2% and 1%, respectively. The prices of natural gasoline, ethane, and propane rose by 1%, 1% and 6%.