Quality Uncertainty, Procurement Strategies, and Grain Merchandising Risk: Vomitoxin in Spring Wheat

Abstract

This study analyzes implications of a random quality factor, vomitoxin, on spatial flows and merchandising risk. Vomitoxin poses major risks for grain traders because of contract specifications, regulatory limits, sampling difficulties, and imprecise measurement. The effect of these were analyzed using crop quality and market data for the U.S. spring wheat crop, which has been severely affected by vomitoxin infestations during the 1990s. The analysis was structured as a blending problem with the objective of maximizing the net value of wheat sales. Relationships among market price spreads and contract specifications are interesting and their effects are demonstrated through simulations. I n many grain markets, price relationships, merchandising strategies, and spatial flows are influenced by quality factors. This is caused by the diverse quality requirements of foreign and domestic end users and variation in quality characteristics across producing regions. Heterogeneity in supply and demand for characteristics is a critical feature of grain handling and merchandising. Elevators segregate grain based on quality factors and enhance margins through blending and conditioning activities. Traders assemble grain from different producing regions with different quality characteristics to satisfy needs of individual buyers and to capture price premiums.However, quality variability creates uncertainty and risk for grain merchandisers. Interest on this topic was heightened by experiences during the 1990s in the spring wheat and barley markets. Weather conditions in 1993 led to a severe

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

“…Other studies using methods that analyze risk, testing, and contract requirements include Johnson, Wilson, and Diersen () on vomitoxin in spring wheat and Wilson, Dahl, and Jabs () on GM Wheat.…”

Estimation of the Deoxynivalenol and Moisture Contents of Bulk Wheat Grain Samples by FT‐NIR Spectroscopy

“…Therefore, depending on the DON level, FHB-infected grains are subjected to price discounts or may become unmarketable (Parry et al 1995;Johnson et al 2001;McMullen et al 2012;Salgado et al 2014;Singh et al 2016). FHB is promoted by warm, humid conditions at anthesis and results in a reduction of wheat yield and deterioration of grain quality, affecting the market value of the grains.…”

“…The accumulation of secondary fungal metabolites, such as trichothecene mycotoxins, mainly deoxynivalenol (DON) and its derivatives, makes FHB-infected grains unsafe for food or feed. Therefore, depending on the DON level, FHB-infected grains are subjected to price discounts or may become unmarketable (Parry et al 1995;Johnson et al 2001;McMullen et al 2012;Salgado et al 2014;Singh et al 2016). Therefore, management of FHB disease to reduce DON levels in harvested grains is indispensable to produce safe, highquality grains that can fetch higher market prices.…”

Moisture Effects on the Prediction Performance of a Single‐Kernel Near‐Infrared Deoxynivalenol Calibration

“…Fusarium head blight (FHB) causes significant yield and quality losses in harvested wheat, resulting in numerous problems in grain marketing, processing, and utilization and leading to severe economic losses (Parry et al 1995; Johnson et al 2001; Nganje et al 2004; McMullen et al 2012; Prat et al 2014). Quality losses include those owing to the presence of mycotoxins such as deoxynivalenol (DON) in infected grains, which are harmful for human and animal health.…”