Costs and risks of testing and blending for essential amino acids in soybeans

Abstract

An important emerging problem in soybean marketing is the variability in quality, which is typically measured by protein and ultimately results in mispricing. This study analyzes the effects of testing soybeans for specific quality traits including essential amino acids. A model was developed to analyze costs and risks that may arise for grain handlers to segregate soybeans into high-and low-quality grain flows based on alternative importer purchasing specifications. A stochastic optimization model is used to determine optimal testing locations and intensities in addition to the costs and risks to grain handlers. The model allows for blending to determine optimal shipments from separate locations with differing quality distributions. This paper provides a framework for agribusinesses, grain handlers, and marketers to make decisions in response to importers' purchasing requirements and strategies. K E Y W O R D Ssoybean quality, testing, trading,

Asymmetric information and blockchains in soybean commodity markets

“…Where historical data were not available to support long‐term averages, we used rough estimates provided in previous studies (Hertsgaard, 2015; Hertsgaard et al, 2019; Lakkakula et al, 2020) to fill in the gaps. In particular, the parameter estimates from these studies were reflective of our base‐case transaction, which involves a PNW exporter that buys soybeans from ND‐origin elevators for export to China (the same base case presented in Lakkakula et al, 2020).…”

“…The soybeans are inspected at the US PNW exporter's facility; if they do not meet the 33.5% minimum protein specification, they must be sold to an alternative buyer at a distressed sale price equal to the PNW par price less a salvage value (i.e., η ) equal to $0.55 per bushel. Hertsgaard et al (2019) assumed that salvage values are distributed as a uniform ($0.10, $1.00) random variable, so the $0.55 value is the mean of the uniform distribution.…”

“… Source : Hertsgaard et al (2019) and the authors' conversations with people involved with the trade. …”

“…With the base case, the buyer bids based on the expectation that the protein content for the delivered soybeans would reflect the historical distribution of protein in ND soybeans. Hertsgaard et al (2019) estimated that the overall protein content of ND soybeans is best represented by a log‐logistic statistical distribution with a location (minimum) parameter equal to 23.9053, a scale parameter equal to 9.911, and a shape parameter equal to 9.3228. This distribution is illustrated in Figure B3 by using the @ Risk software application (Palisade Software, 2020a).…”

Combining Total Cost of Ownership and Multi-Criteria Decision Analysis to Improve Cost Management in Family Farming

“…Cost management is focused on acquisition of relevant information to assist stakeholders in management and decision making [32,33]. A good understanding of the behavior of materials and labor costs are particularly important in the implementation of a coherent cost management system in agriculture [34].…”