Food & Beverage

Spring rings in with lower pizza commodity prices, higher stock values

Pizza operators get some good reasons to have a little "spring in their steps."

Photo: iStock.

March 29, 2021 by S.A. Whitehead — Food Editor, Net World Media Group

The pizza gods are apparently pleased with the start of spring since they were most assuredly smiling down on most operators last week as everything from gas to grain prices tumbled in commodities trading, while all but one of the major publicly traded pizza companies Pizza Marketplace watches managed to step up in value on Wall Street.

In the win column last week, Domino's Pizza managed another hike in stock price gaining $8.14 last week to close Friday at $371.84. The news was also good for Pizza Hut parent company, Yum Brands, and Papa John's, which both managed a tick up in value. Yum closed Friday at $108.06, up a dime from the previous week's close. Papa John's lifted its trading value $1.34 on the week to close Friday at $88.42.

Meanwhile, Pizza Inn and Pie Five parent, Rave Restaurant Group, recorded the week's only loss in value, tumbling from $1.73 the previous week's close down to $1.44 last Friday, March 26, a loss of 29 cents.

Cheese

In cheese trading last week the price trend was decidedly downward, with the average for barrels off 6 cents to $1.45, while blocks fell nearly 9 cents to $1.71. Closing prices for barrels on the Chicago Mercantile Exchange averaged $1.46, while 40-pound blocks closed at $1.72.

The U.S. Department of Agriculture said the demand for foodservice is strengthening, particularly on the foodservice side, as pandemic restrictions ease. Western contacts relay export numbers have improved, as well.

Cheese inventories are noted as steady to a bit higher than they were in early spring 2020. Although block prices have slipped in Chicago from last week, cheese market tones are somewhat stable.

Wheat

Wheat prices were also trending lower, with May soft red wheat on the Chicago Board of Trade falling 15 cents on the week to close Friday at $6.13 per bushel. Meanwhile, the price of hard red winter wheat fell even lower in Kansas City, where the commodity closed Friday at $5.68 per bushel, which is down 17 cents on the week.

At the Minneapolis Grain Exchange, the average price dropped 14 cents to $6.13 per bushel for hard red spring wheat. Some of the causes for the lower prices were attributed to weakened export demand and more rainfall in many growing areas, helping to strengthen the crop outlook in the northern hemisphere.

Auto fuel

Last week something beautiful happened at the gas pump, with gas prices managing to fall despite the fact that demand is increasing, according to the American Automobile Association. Over the five weekdays last week, in fact, the national average for a gallon of regular gasoline dropped a penny to $2.87.

AAA said growing stock levels have helped to put downward pressure on pump prices, with those levels increasing slightly from 232.1 million barrels (bbl) to 232.3 million bbl, according to the latest weekly report from the Energy Information Administration. That helped the national average drop despite gas demand growing from 8.44 million barrels per day (b/d) to 8.62 million b/d.

Over last week, the biggest gas price swings were in Utah ( up 8 cents), as well as Michigan and Ohio (down 7 cents), and Idaho (up 6 cents). Today the national average price is $2.86 for a gallon of regular, down 2 cents from last week, but up 14 cents from last month. Mid-grade ($3.19) and premium ($3.46) were each down about a cent over the week, but up 16 cents for both over the prices paid last month.

Diesel today average $3.10, a penny off from last week's price, while E85 averaged $2.44, down 3 cents from a week earlier.

Natural gas

Natural gas spot prices fell at most locations for the latest reporting period that ended on March 24, as heating demand continued to decline and dry natural gas production reached the highest level since the first week of January. The Henry Hub spot price fell from $2.51 per million British thermal units (MMBtu) to $2.45/MMBtu over that period.

At the New York Mercantile Exchange, the price of the April 2021 contract decreased 1 cent, from $2.53/MMBtu to $2.52/MMBtu. The price of the 12-month strip averaging April 2021 through March 2022 futures contracts climbed 2 cents/MMBtu to $2.75/MMBtu.

The net withdrawals from working gas totaled 36 billion cubic feet (Bcf) for the week ending March 19. Working natural gas stocks totaled 1,746 Bcf, which is 13% lower than the year-ago level and 4% lower than the five-year (2016–2021) average for this week. The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 44 cents/MMBtu, or 5.6%, averaging $7.46/MMBtu, mirroring a 5.6% decline in West Texas Intermediate crude oil prices.

The prices of natural gasoline, butane, and isobutane, which are most closely correlated with crude oil, fell by 10%, 8%, and 7%, respectively. Recovering petrochemical industry feedstock demand supported ethane and propane prices, which fell by less than others. The average weekly ethane price declined by 1%, and the average weekly propane price declined by 4%.

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.