EFFECT OF HARD RED SPRING WHEAT CONSISTENCY ON MILLING VALUE

Increased concerns over the quality of wheat in domestic and export markets has focused attention on the consistency of wheat quality. This study utilized three measures to examine the effect of variability in characteristics on the milling value of wheat. Distributions and correlations for wheat quality characteristics were estimated from U.S. wheat export data from 1985-1997. Effects of variability of wheat characteristics on the value of wheat to the miller for each of the three measures were estimated using a simulation model. U.S. No. 1 exports of Hard Red Spring (HRS) had higher value to millers on each of the three measures (net wheat, millable wheat index, and value added in milling) than did exports of No. 2 or better (OB). However, the value to millers of No. 1 HRS was more variable than for No. 2 OB HRS, likely due to a larger negative correlation between the levels of moisture and shrunken and broken kernels in exports of No. 2 OB HRS than No. 1 HRS. Further, the value of wheat to millers for each of the three measures varied substantially by importing country. Sensitivity analysis indicated that increases in the consistency of moisture would provide the greatest reduction in the variability of value to millers, while increases in the consistency of foreign material, shrunken and broken kernels, and dockage had lesser impacts. This suggests that millers looking to increase the value of wheat lots used in milling may want to consider adding restrictions/incentives on moisture to limit the variability from lot to lot. However for dockage, shrunken and broken kernels, and foreign material, the focus should be on actual levels within lots rather than variability between lots.