Input Costs +1.9% w/w, -12.5% y/y, Energy & Freight Bounce on Iran Conflict; Staples Implications. Friday Cost Factor. HSY+, MDLZ+ CMG+, HRL+, LW+, KR-, ACI-

By Jonathan Feeney and David Schick and David Katzman and Jack Hermann Published on March 6, 2026 PDF

Optimal Advisory Cost Factor – Cost Factor rose (+1.9% w/w) but remains sharply down (-12.5% y/y), with energy & freight costs bouncing on conflict in the Middle East. The Optimal Cost Factor unpacks implications for staples companies — still positive for HSY, MDLZ, LW, HRL, SFD & most restaurants. Perishables remain a fierce comp headwind for food retailers, in evidence with KR’s guidance yesterday.

Cost tailwinds to watch: Softs/Sweeteners down -31.6% y/y, HSY -37.4% y/y, LW -28.5% y/y, Wing restaurants -18.8% y/y. See Fig 1.

Cost headwinds to watch: Energy/Freight +9.5% w/w, Oil/Oilseeds +5.7% y/y. See Fig 1.

Higher Energy/Freight Costs with broad-reaching exposure to Staples. All 30/30 measured company specific costs factor indices up w/w (along with 6/6 food service indices). See Fig 5-8. While few energy & packaging related inputs are bought on spot, it’s unexpected cost pressure that will hurt somewhere. We also monitor weekly performance of key equity indices and macro indicators. Oil up +22.5% w/w as Staples (-3.4% w/w) & Industrial (-3.6% w/w) sectors of the S&P leading equity losses this week, highlighting exposure to oil production. See Fig 11.

HSY and MDLZ leaders in gross EBIT impact of lower input costs. Commodity tailwinds continuing this week for Cocoa exposed companies, Cocoa down -30% m/m and down -50% YTD off increased supply from better-than-expected global harvests & declining demand. See Fig 2.

Cost Factor +1.9% w/w, -12.5% y/y (vs. prior week +0.4% w/w & -12.6% y/y). Spot energy inputs higher this week (notable Bunker Fuel +39% w/w, and up +56% YTD) on breakout of conflict in Middle East. Bunker Fuel is the primary energy source for large cargo ships. While not as acutely felt as the recent volatility we have been experiencing in Natural Gas prices, sustained higher shipping costs impact the entire supply chains of factories & many other Staples areas largely as a packaging input.

In this weekly note, we identify spot input costs’ putative impact on the U.S. fast moving consumer goods (FMCG) value chain, most measurably impacting staples, staples retailers, restaurants & food service. Optimal’s proprietary cost factor weights ticker & sector specific cost trends using a proprietary formula based on 32 trackable spot cost inputs – 23 of which are updated as of last night, the other 9 are latest available.

Figure 1: Weekly Cost Factor Summary

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 2: Weekly Cost Factor Margin Context

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 3: Weekly Input Commodity Performance by Group

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 4: Biggest Input Cost Movers y/y

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 5: Food Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 6: Beverage Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 7: HPC Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 8: Restaurant Level Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 9: Restaurant Employment Cost Index

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 10: Staples Sector Theme Box

Figure 11: Market Sector Performance

Sources: Optimal Advisory Proprietary Analysis, Bloomberg

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