GRAIN QUALITY AND NORTH AMERICAN HARD WHEAT EXPORTS

Past debate on competition and quality in international wheat markets has focused on class and country of origin as the salient source of differentiation. This study analyzes changes in demand for both wheat classes and grades. Comparisons are made between Canadian and U.S. hard wheats, principal competitors in the hard wheat market. Both countries are dominant producers of Hard Red Spring Wheat (HRS in the United States and Canadian Western Red Spring [CWRS] in Canada); the United States is the dominant producer of Hard Red Winter (HRW); and both countries are large producers of durum (Hard Amber Durum [HAD] in the United States and Canadian Western Amber Durum [CWAD] in Canada). Due to the indigenous similarities among these wheats, the competitive environment between these two countries is particularly acute. The study documents the composition of exports by class and grade, evaluates changes through time, and identifies segments of countries with similarities in grade specifications. Results identify important differences in composition of exports. Whereas Canada exports largely No.1, the United States exports largely No. 2 OB (or better). Further, there have been changes in the composition of exports by class and grade toward HRS, CWAD, CWRS and toward higher grades within classes. Results indicate the following: * Composition of Exports: Canada exports a substantially larger portion of its exports as No. 1 than does the United States. This is true for each class. The average shares of exports of grade No 1. for each class from 19861991 were HRW, 3 percent; HRS, 7 percent; CWRS, 60 percent; HAD, 5 percent; and CWAD, 25 percent. * Changes in the Composition of Exports: There have been some dramatic changes in the distribution among exports by grade and class that have important implications. Generally, results from this study indicate the following: By class. From the early 1980s to the mid-1990s, wheat classes whose exports increased the fastest were HRS, Canadian Other, CWRS, and CWAD (from greatest to least). Those classes experiencing negative growth included HAD, soft, and HRW (listed from least to greatest negative growth). By grade. There have also been some notable changes in the composition of exports among grades from each country. From 1986-87 to 1993-94, export volumes of HRW, HRS, and HAD have shifted from lesser amounts of lower-grade wheat to greater proportions of higher-grade wheat. Most notable (in percent net shift) has been the growth in exports of No. 1 from the United States. The change represents a shift from lower grades. * Market Segments. Cluster analysis is used to identify countries importing similar qualities of hard wheats from the United States (comparable data did not exist for Canadian exports). Countries importing wheat with similar characteristics are referred to as segments, and their behavior and composition has important marketing implications. Results from this analysis indicate the following: Changes in segment numbers over time. There were notable changes in the definition and composition of segments over the time period of the study. The number of segments existing in durum exports increased from three to four, HRS increased from two to five segments, and HRW increased from two to four segments. In general, these were distinguished by the levels of dockage, test weight, defects, and protein level. Segment composition. Countries included in what would be defined as the higher quality segments varied, and in some cases, they jumped in and out of a segment. Those countries that were in the higher-quality HAD segment more than 50 percent of the time in more recent years include Italy, Costa Rica, Japan, and Kuwait. Those in the higher-quality HRS segment more than 50 percent of the time were Taiwan, South Korea, Malaysia, New Zealand, and Singapore. Those in the higher-quality HRW segment more than 50 percent of the time included Japan, South Korea, Taiwan, Thailand, Bangladesh, Hong Kong, Malaysia, and Norway. A number of implications can be discerned from these results that are important for both the public and private sectors. First, it is notable that the fastest growth market has been HRS, whereas HRW has fallen sharply, suggesting a significant shift in the composition of trade over the past decade. Second, in the United States, there has been debate about whether to attempt to regulate the quality level of wheat exports through factor limits, as opposed to relying upon contractual specifications between buyers and sellers. These results suggest that over time, the quality (level and specificity) of wheat exported from the United States has increased. This is likely a result of competition among suppliers and of importers' contractual specifications to obtain higher-quality wheats. Finally, comparisons between U.S. and Canadian exports and prices must take into account the important differences in the distribution of their respective exports among classes. It is notable that a large proportion of Canadian exports are No. 1 in contrast to those from the United States which are predominately No. 2. This is important because routinely quoted prices are for No. 1 from both Canada and the United States. Thus, direct comparisons of these prices should be treated with caution. A number of implications for the private sector can also be identified from these results. First, the shift in U.S. exports toward greater specificity and generally toward higher-quality wheats has implications for the domestic processing sector. Traditionally, the processing sector dominated the consumption of higher-quality hard wheats, leaving the remainder for the export market. The shifts identified in this analysis suggest that in the future, the domestic market will have less dominance over the higher-quality wheat supply, thus having the effect of raising premiums. A second implication relates to the apparent increase in differentiation and number of segments in the international wheat market. These results demonstrate the extent to which the private trading and handling sector has responded to market conditions by increasing specificity. It also should be viewed positively by traders and others in the supply chain in that the trend allows them to compete in segments less characteristic of "commoditization." However, doing so may very well require the ability to create segregations that are maintained throughout the supply chain through the use of increasingly more sophisticated premium/discount schedules and/or through other vertical coordination mechanisms.grain quality, wheat exports, wheat markets, International Relations/Trade, F1, Q1,

PROCUREMENT STRATEGIES: IMPACTS OF QUALITY RISKS IN HARD WHEAT

Analytical models were developed in this paper to evaluate cost/risk tradeoffs of three alternative procurement strategies in the case of hard red spring (HRS) wheat. Results indicate a naive strategy has the lowest expected cost, but a high probability of not conforming to end-use requirements. Two alternative specifications for the constant share strategy result in higher probabilities of meeting requirements, but at higher costs. The opportunistic strategy results in a higher probability of meeting requirements than either of the other two alternative strategies at a comparable cost.Crop Production/Industries,

PROCUREMENT STRATEGIES: IMPACTS OF QUALITY RISKS IN HARD WHEAT

Development and organization of procurement strategies have escalated in importance with maturity of the food processing industry, as well as with the prospect of greater choice attributable to variety development and information technology. Conventional alternatives for procurement range from spot purchases with specifications for easily measurable characteristics, to varying forms of strategies with pre-commitment. In the case of grains these choices are complicated by two factors. First, there is intrinsic uncertainty associated with end-use qualities that are not easily measurable. Second, grain prices and therefore procurement costs vary spatially due to competing market regions. Thus, shifting origins may involve higher cost due to having to bid grain away from its next best market. We posed three procurement strategies and developed analytical models to evaluate the risks and costs among these alternatives in the case of hard red spring (HRS) wheat. The first involves no commitment. The second involves some form of irrevocable commitment and the third entails less commitment. Stochastic simulation models were developed for each with an objective of cost minimization subject to different levels of risk. The results indicate that the naive strategy has the lowest expected cost, but a fairly high probability of not conforming to end-use requirements. The constant share strategies result in higher probabilities of meeting requirements, but at substantially higher costs. The opportunistic strategy results in a higher probability of meeting requirements than either of the other two alternative strategies at a comparable cost.Marketing, Agribusiness,

INCREASING CONCENTRATION IN THE U.S. HARD WHEAT MILLING INDUSTRY

This research shows that increased concentration in the U.S. wheat milling industry has not led to noncompetive pricing in upstream or downstream markets. Increased concentration has helped to reduce the marketing margin by $0.65 for every 100 pounds of flour produced. This is about 7% of the average marketing margin.Crop Production/Industries, Industrial Organization,

Optimal Length of Moving Average to Forecast Futures Basis

Futures prices when combined with a basis forecast provide a reliable way to forecast cash prices. The most popular method of forecasting basis is historical moving averages. Given the recent failure of longer moving averages proposed by previous studies, this research reassesses past recommendations about the best length of moving average to use in forecasting basis. This research compares practical preharvest and storage period basis forecasts for hard wheat, soft wheat, corn and soybeans to identify the optimal amount of historical information to include in moving average forecasts. Only with preharvest hard wheat forecasts are the best moving averages longer than 3 years. The differences in forecast accuracy among the different moving averages are small and in most cases the differences are not statistically significant. The recommendation is to use longer moving averages during time periods (or at locations) when there have been no structural changes and use last year’s basis after it appears that a structural change has occurred.Basis forecast, grain, Law of One Price, moving averages, structural change, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Crop Production/Industries, Farm Management, Financial Economics, Marketing, Research Methods/ Statistical Methods, Risk and Uncertainty,

Quantitative Trait Loci Associated with Milling and Baking Quality in a Soft X Hard Wheat Cross

Interclass hybridization between soft and hard wheat (Triticum aestivum L.) results in new genetic combinations of potential value

Milling wheat for northern areas

Miling - a new hard wheat variety for the north central medium and high rainfall areas including the Midlands region

Wheat Growing and Quality in Organic Farming

This chapter will present criteria of the selection of suitable varieties for the organic farming system, depending on land and climatic conditions of a farm, current legislation, availability of seeds, options of the final use, etc. Data in this chapter are based on results of the trials carried out by authors on their working places and a discussion on o given topic. Exact small-plot trials with particular selected varieties (bread and hard wheat) and genetic resources of hulled wheat species (einkorn, emmer wheat, spelt wheat) were established on the authors' working places between 2005 and 2010. Significant and important characteristics for the organic farming (morphological, biological characteristics, yield formation and structure of yield, qualitative parametres of the production)

Monitoring of arthropod infestations on high quality hard wheat in southern Italy

The results of a survey in 2006-2009 on high quality hard wheat, coming from 31 different storage centers located in Southern Italy, are reported. About 300 samples were analyzed by visual test, while 891 by both sieving and biological test. For the three different kinds of test the infesting species are listed and their relative incidence on the samples is reported. The most widespread species in the samples belonged to the order Coleoptera, i.e. Sitophilus granarius, Rhyzopertha dominica and Oryzaephilus spp., while Lepidoptera were less abundant. The results are discussed with the aim of providing the storage centre operators with helpful information on the correct monitoring strategies to adopt in case of arthropod infestations in high-quality hard-wheat warehouses.Keywords: Stored grain, Insects, Sampling, Coleoptera, Ital

DERIVED DEMAND FOR WHEAT BY CLASS

To quantify price responsiveness and economic substitutability among wheat classes, derived demand functions were specified from a normalized quadratic profit function. Own-price and cross-price elasticities were estimated for hard red winter, hard red spring, soft wheat (combined red and white), and durum wheat. In general, soft wheat varieties were less responsive to their own price than were hard wheat varieties. Cross-price elasticities indicate that hard red winter wheat, hard red spring wheat, and soft wheat varieties are economic substitutes. Cross-price elasticities are different from those previously reported, which can have important policy implications.elasticities, normalized quadratic, substitution, Crop Production/Industries, Demand and Price Analysis,