Top Specifications For Wheat Contracts

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Aug 28, 2020 | Insights

Reading time: 6 minutes

Introduction to Contract Specifications

For all trading contracts, specifications can be added as a clause to the agreement to ensure the goods’ quality. Naturally, no one party wants to find itself with an ‘off-spec’ product. It is thus essential to know the name, units, and standards of the important Wheat specifications in the business if one wants to trade it. In this article, we will see what the top Wheat contract specifications are, along with their characteristics.

The Most Common Contract Specifications

There are many existing specifications for Wheat, and most of them correspond to a mathematical measurement with a unit. For parties to appreciate each one of them, the specifications are standardized.

Figure 1: Wheat Specifications Table

These tables summarize all the various specifications and reference them by names, unit measure (most often %), and a Standard identification code.

These standardized codes originate from different organizations:

  • ISO corresponds to the International Organization for Standardization
  • GOSTs are the standard certifications for the Russian Federation and other CIS countries; thus, GOST K is the Khazak market certification
  • ICC is the International Chamber of Commerce
  • EN stands for European Norms and thus corresponds to the European Union standard

¬†These tables are specific to Wheat; however, most processes are not exclusive to it. Moreover, some procedures correspond to different countries’ standards. Nonetheless, their usage is universal, and most often, only units differ. We will not examine and evaluate all specifications for Wheat. Instead, we will focus on those whose nature is the most recurring. Here are the top specifications for Wheat contracts.

Protein Specification

The Protein specification found in contracts defines the protein level (in %) contained in Wheat. Since not all types of Wheat have the same base amount of protein, we target different levels depending on the product. However, there are variations in protein levels – which is natural – so the aim is to have a percentage that falls within an acceptable range. Additionally, this specification is one of the most influential in the market.

Moisture Specification

Moisture is the measure (in %) of the amount of water present in Wheat. This specification aims to show whether the product has sufficient moisture and has suffered from droughts or bad transport conditions. The loss of moisture produces a loss of mass, affecting the value of the contracted merchandise. On the other hand, too much humidity can also imply or provoke rot during transport.

Test Weight Specification

The test weight corresponds to the average weight of a given cereal in a given unit.
The standard for this specification is g/l (gram per liter) for the Russian Federation and Kg/hl (kilogram per hectolitre) in CIS countries. However, it can be different for other certifications (e.g., USDA measurements are in lbs./bu. [pounds per bushel]). This measurement gives information about the growth quality of the evaluated grain. It is one of the most critical tests for Wheat products.

W Specification (or Energy deformation of Dough)

W specification does not concern all types of Wheat and, as a result, is seldom found in contracts. This specification corresponds to the viscosity of doughs produced by types of Wheat millings by measuring how much potential energy is stored in tens of microjoules (10-4Joules) for certain thresholds, compared to benchmark measures. Although mostly used for Milling Wheat, Energy deformation of Dough can also be relevant for different Wheat products because it evaluates the quality of gluten and Wheat’s chemical reactions in general.

Gluten Specification

Gluten is a straightforward specification. It measures the quantity of gluten present in Wheat (in %). Like most specifications, it must fulfill a specific amount within acceptable measures determined in the contract when required. With the ever-increasing demand for gluten-free products, this specification can be seen quite frequently.

Falling Number (Hagberg Test) Specification

The Falling Number (also known as Hagberg Test) is a technique used to measure the degradation of Amidon in Wheat. It measures (in seconds) the fall time of an agitator in a heated Amidon-water mix. This test aims to know the impact of early crop germination caused by humid or rainy weather as it provokes an accelerated release of enzymes that degrades Amidon in grains. Therefore, grains with heavily degraded Amidon have less viscous test mix and a smaller Falling Number specification. A small number of affected grain in cargo can trigger this reaction for many grains and render it improper. As such, this is a critical test, not to be overlooked.

Foreign Matter Specification

It is a measure (in %) of the amount of foreign matter in a volume of Wheat. Foreign matter is a broad category under which falls any matter that is not a grain (as specified in the table’s standard column). Foreign matter can range from dust, dirt, to residuals of stems, or sometimes worse. This specification is used in contracts mostly to prevent liability from the seller’s side or to ensure that the goods are actually what the buyers bought – for example, if 15% of the merchandise turns out to be foreign matter, 15% of the investment can be lost, sometimes perhaps even more. Foreign Matter clauses also protect from more significant risks (e.g., breaking of tools, forced shutdown of the factory) that could reveal too costly for any contracted parties.

Bug Damaged Specification

Bug damaged specification shares similar reasoning with Foreign Matter specification and the Hagberg Test specification. Naturally, Bug Damaged grains are improper for consumption and are considered a raw loss. But that can also imply the presence of pest infestation in crops, which degrades the overall quality of the products.

Other Cereals Specification / Grains Admixture Specification

This specification is straightforward. It measures (in %) the presence of cereals that are different from the product. Logically when buying a product, one would want to have an ideal 100% of this product. However, most sellers produce other cereals (e.g., barley, corn, soybean), and some can occur. While it is crucial for the same reason as the Foreign Matter specification (i.e., percent of merchandise lost), it is also essential for buyers – for health reasons – due to frequently allergy-inducing cereals like soybean.

 

 

How important are the other specifications?

We’ve left many specifications represented in the tables out of this analysis’s scope, such as Insect Damage, Shriveled, Gluten index, or IDK. While those specifications indeed are essential – and some of them we can even classify as top specifications – we also see that they don’t necessarily appear in every contract because they are only used in specific locations. Additionally, some countries may require double standards. For instance, the Russian Federation and CIS countries require to pass both the ISO and the GOST Gluten specification certifications. As such, we decided not to describe each of these today.

Conclusion

Wheat contract specifications are critical measurements for trading contracts values, and can even influence the market. They must respect specific standard tests and certifications, which can be provided by different agencies. As such, we see the rise of location-specific specifications in addition to product-specific ones, thus providing various long lists of specifications to be aware of. Therefore, we highlighted some of the top Wheat contract specifications sought after across different regions and that have the most influence on the market.

 

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