Article

Tough market last week for pizza operators

Commodity prices were up and pizza stock prices fell last week in trading at the major markets nationally.

June 13, 2016 by S.A. Whitehead — Food Editor, Net World Media Group

Pizza stocks tumbled last week fairly substantially, while the value of just about everything involved in making and delivering pies increased in trading last week. Here’s a look at the closing information for the market last Friday for key commodities in the pizza marketplace: 

Cheese

Average block cheese prices increased 4 cents during the week on the Chicago Mercantile Exchange. Prices were $1.46 Monday, $1.44 Tuesday and $1.48 Wednesday, Thursday and Friday. That’s up from the previous week's prices, which began with the markets closed on Monday, then on Tuesday the price was $1.37, followed by $1.36 Wednesday, $1.40 Thursday and $1.44 Friday. 

Wheat

Wheat prices shot up last week as well, ending Friday at $5.39, which is 11 cents higher than the previous Friday at the Minneapolis Grain Exchange.

Gasoline and diesel fuel

Monday's nationwide average for regular unleaded gasoline was $2.38, up 2 cents from a week ago, according to AAA and the Oil Price Information Service.

Prices are also up from $2.21 a month ago, but still significantly lower than this time last year, when consumers were paying $2.80 at the pump.

Mid-range unleaded is up 3 cents from last week to $2.63, while Monday's premium unleaded price was up 2 cents to $2.85.

The nationwide average for diesel fuel is $2.37, up 2 cents from a week ago. Diesel prices are up 14 cents from $2.23 a month ago, but still down 50 cents from $2.87 a year ago. 

Natural gas

Heading into the summer cooling season, the New York Mercantile Exchange natural gas contract for July has markedly exceeded Henry Hub spot prices, likely reflecting expectations for summer natural gas consumption to increase substantially from current levels. On May 27, the first day the July contract was trading in the front-month position, futures closed at $2.169 per million British thermal unit (MMBtu). This was more than 20 cents/MMBtu higher than the expired June contract — an uncommonly high change for a contract rollover at this time of year (in 2015, there was a 9-cent/MMBtu drop in the futures contract when the June contract expired). Both spot and futures prices have risen substantially through early June, with the New York Mercantile Exchance contract for July averaging $2.432/MMBtu as of June 8, 13 cents/MMBtu higher than the average Henry Hub spot price for the same period.

In general, the spread between the front-month futures contract and current spot prices has historically been slightly positive going into summer, as natural gas heating demand evaporates. The five-year (2011-15) weekly spread has been less than 5 cents/MMBtu throughout April and May. But this year, the weekly average futures contract has been higher than the weekly average Henry Hub spot price by more than 10 cents/MMBtu since late April. Based on the five-year average, this magnitude of futures/spot price spread has traditionally been more common in November, at the beginning of the heating season.

Pizza company stocks
Shares in Pizza Hut parent Yum! Brands Inc closed Friday at $82.50, down $1.23 from the previous close. 

Domino's finished last week at $125.87, also down $1.23 from the previous close. 

Papa John's fell 74 cents Friday to $64.56, while Papa Murphy's fell 14 cents to $7.40. 

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.