Food & Beverage

Wheat prices head for the heavens, as most pizza stocks struggle

With skyrocketing wheat, gas and cheese prices, this week's commodities report does little to start the week off on a high note for pizza operators.

Photo: iStock.

July 19, 2021 by S.A. Whitehead — Food Editor, Net World Media Group

Commodity and pizza stock price trends failed in most cases to do pizza operators any real favors last week, when investors in this sector of the restaurant industry pulled back, just as the prices for every main operating commodity pushed upward, in some cases, dramatically.

On the brand investment front, traders only showed real love last week for that pizza powerhouse of Ann Arbor — Domino's. The brand — which also announced the opening of its 18,000th store last week — again gained value over the trading week, adding $5.12 in value and closing Friday at $482.68. But, Domino's profits were other major publicly traded brands' losses, with the three other brands monitored by this website weekly only suffered losses on the week.

Papa John's, for instance, logged a $2.60 loss on the week, to close Friday at $108.40. Fellow Louisville, Kentucky-based company, Yum Brands — owner of Pizza Hut — also recorded a $2.71 loss on the week, closing Friday at $115.85.

And finally, Pie Five and Pizza Inn parent, Rave Restaurant Group Inc. closed the week at $1.25 – a fairly dramatic tumble of 18 cents over the week for that Dallas-based company.

Cheese

Cheese markets last week did little to brighten pizza brand leaders' days, showing modest gains in average prices for both barrels and block. In Chicago, barrels closed at $1.44 Friday, while 40-pound blocks ended at just under $1.62. The weekly average for barrels was up a cent to $1.57, while blocks gained almost a cent, for an average price of $1.70.

Cheese contacts are — much like pizza brands themselves — reporting labor shortages and hauling issues nationwide. Additionally, Western region producers have the added obstacle of port congestion to contend with, according to the U.S. Department of Agriculture.

Cheese producers in the West said those issues with the ports are pushing more cheese supplies into domestic warehouses. At the same time, Eastern U.S.D.A. sources said recently produced cheese is somewhat tight.

There remains to be plenty of milk in all regions for busy production schedules, but Western contacts did point out a lighter overall availability for the first time this season. Chicago Mercantile Exchange market prices came into the week with some bullish momentum, but by Thursday the bears put an end to the upward pressure.

Wheat

Last week, U.S. wheat prices recorded their largest weekly gains in six years — up nearly 4% in some cases. The combination of worsening weather conditions nationally and lower wheat stocks combined to launch prices for the grain upward.

On the Chicago Board of Trade, September soft red winter wheat closed at $6.92 per bushel, up 84 cents, while in Kansas City, September hard red winter wheat ended up 52 cents to $6.51, according to the U.S.D.A. Lastly, in Minneapolis, September hard red spring wheat was $9.17 per bushel up $1.04.

Auto fuel

Over last week, gas nationally experienced an average national price increase of one cent on the gallon, climbing to $3.15, on average — about $1 short of the all-time high paid for a gallon of regular some years back, according to the American Automobile Association. The U.S. Energy Information Administration also said that gas demand actually fell from an all-time high of 10.04 million barrels per day (b/d) to 9.28 million b/d last week. That decrease, alongside a 1 million-barrel increase in total domestic gasoline stocks to 236.5 million, has helped to slow pump price increases.

However, AAA said that with oil prices above $70 per barrel now, pump prices will likely remain high (above $3 per gallon) throughout the summer driving season. Last week, the biggest average price increases nationally were seen in Utah (up 10 cents), Idaho (up 8 cents) and Wyoming (up 7 cents).

The current average price for a gallon of regular is $3.17, up two cents from seven days ago and 10 cents from last month. At $3.52 per gallon, mid-grade was up 3 cents on the week, while premium — at $3.79 — was up 2 cents for the same period. Diesel fuel, priced at $3.28 today on average gained a penny on the week, while at $2.67, E85 fuel gained 2 cents.

Natural gas

Natural gas spot prices rose at most locations for the seven-day period that ended July 14. The Henry Hub spot price rose from $3.60 per million British thermal units (MMBtu) to $3.75/MMBtu over that same span.

The price of the August 2021 Nymex contract increased 6 cents, from $3.60/MMBtu to $3.66/MMBtu over that period, with the price of the 12-month strip, averaging August 2021 through July 2022, futures contracts climbed 6 cents/MMBtu to $3.48/MMBtu.

Ethane prices rose 1%, while natural gas prices on the Houston Ship Channel rose 2%, narrowing the ethane premium to natural gas by 2% on a heat-value parity. Propane and normal butane prices fell 1%, isobutane prices fell 2% and natural gasoline prices increased by 1%.

About S.A. Whitehead

---

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.