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Buyers

Contract Specifications

Contract Specifications

Most of the wheat grown in North Dakota is exported out of state or out of the country. The North Dakota Wheat Commission provides production and quality information about North Dakota wheat and educational opportunities for buyers, but does not sell the physical product. Farmers in the state generally sell their crop to one of the more than 300 local elevators in the state, who then market the crop domestically or for export. The United States offers six distinct classes of wheat to customers worldwide: hard red spring, hard red winter, hard white, soft red winter, soft white, and durum. These classifications are based on kernel hardness, kernel color, and time of planting. Each class has its own uniform characteristics related to milling, baking and other food uses. North Dakota produces primarily hard red spring wheat and durum, and small amounts of hard red winter. The state leads the nation in the production of hard red spring and durum wheat. Buyers of hard red spring wheat and durum have a wide range of quality options to choose from based on their contract specifications. To acquire the quality desired, it is important to understand the options available. Buyers should work closely with their grain trade representative for contract specifications. The North American Export Grain Association (NAEGA) is a good source for contract specifications and information on contracts. U.S. Wheat Associates also offers a substantial amount of information on sourcinc U.S. wheat and contract specification. Some information on grading and contract specifications is listed below. Again, working directly with your supplier on contract specifications is very highly recommended.

Hard Red Spring Wheat

Grade

U.S. grades 1-5 and Sample Grade reflect the overall soundness of the wheat.

 

Class/Subclass

The class of wheat is hard red spring, with subclasses for dark, hard and vitreous kernel content. Subclass options include Dark Northern Spring (DNS), Northern Spring (NS), and RedRS).  DNS is 75% dark, hard and vitreous kernels or higher, NS is 25 to 74% dark, hard and vitreous kernels and RS is below 25%.

 

In addition to official grade criteria and subclass information, buyers often include some of the below information in their contract.

 

Protein Level

Examples of minimum protein options adjusted to a constant 12 percent moisture basis include: 13.0% 13.5% 14.0% 14.5% 15.0%

 

Moisture Content-Maximum moisture content options include: 13.5% 13.0% 12.5% 12.0% 11.5% 11%

 

Falling number (FN) analysis includes many options such as:

  • FN minimum 300 cargo composite

  • FN 300 sublot average

  • FN no sublot under 300

 

Contract Specification Basics

In the competitive U.S. wheat export market, contract terms are critically important in assuring quality. By observing three simple principles, buyers can be assured of quality wheat at the most competitive price:

 

  1. Don't ask for the impossible. While some demands may be technically possible, the cost may be prohibitive. Buyers must consider the cost of the specification versus the economic value that quality will return. U.S. Wheat Associates and grain trade representatives are available to help analyze these options.

  2. Changes in contract specifications should be known well in advance. This helps reduce "price shock" offers, allows ample time to refine the contract terms and allows time for the export trade to assess its risks fairly and offer the best price.

  3. When possible, allow for flexibility in contract specifications. That way the buyer will essentially receive the same quality but often at a significantly lower price by reducing risk to the exporter.

 

Examples

Buyers can always require more restrictive limits than those stated in USDA grades. Here are samples of contract specifications using options described in the contract specification section.

 

Rigorous Specifications

  • U.S. grade No. 1 Dark Northern Spring

  • Protein, minimum 15%, no sublot below 14.9%

  • Dockage, maximum 0.5%, no sublot to exceed 0.5%, all dockage deductible from the contracted weight

  • Moisture, maximum 12%

  • Maximum sprouted kernels 0.1%

  • Falling number, minimum 350 sublot average

​

Relaxed Specifications

  • U.S. grade No. 2 or better

  • Northern Spring or Dark Northern Spring

  • Protein, minimum 13.0% average

  • Dockage, content above 1.0% deducted from contract weight

  • Moisture, maximum 13.5%

  • Maximum sprouted kernels 4%

Durum

Grade 

U.S. grades 1-5 and Sample Grade are determined by test weight, percentage of defects (damaged kernels, shrunken and broken kernels, and foreign material), and the percentage of wheat from other or contrasting classes. Typically, most buyers of U.S. durum specify No. 2 or better.

 

Class/Subclass 

The class of wheat is durum, with subclasses controlling for hard, vitreous kernel content. Subclass options include:

Hard Amber Durum (HAD) with more than 75 percent vitreous kernels,

Amber Durum (AD) with 60 to 74 percent vitreous kernels, and

Durum (D) with less than 60 percent vitreous kernels.

 

Most buyers prefer hard amber durum (HAD).

 

Protein Level 

Quoted on a 12 percent moisture basis. Protein specifications have recently become more important in durum contracts due to labeling requirements on the finished product, especially in the United States. Most buyers specify a minimum of 12 or 13 percent protein.

 

Moisture content-Maximum moisture content options include: 13.5% 13.0% 12.5% 12.0%

 

Falling number 

Generally a minimum of 300 seconds but some will specify 350 seconds.

Options may include:

FN minimum 300 cargo composite

FN 300 sublot average

FN 300, no sublot under 300

 

Contract Specification Basics 

Buyers need to be aware of actual production quantities and qualities when setting contract specifications for durum. Durum production is concentrated to a smaller geographical area than other classes of U.S. wheat, which puts the crop at an increased risk from adverse weather. There is no good substitute for durum in the production of premium pasta, so the market is highly sensitive to changes in quality from year-to-year. Price premiums and discounts for quality factors, such as vitreous kernel content, test weight, and total defects can be significant.

 

If premium durum pasta is the end-use desired, you may wish to use tighter specifications for vitreous kernel levels, falling number, test weight and total defects. If total extraction is more important than semolina extraction, and a bright, yellow color is not vital , you may be able to obtain a lower price by using more relaxed specifications.

 

Examples of specifications which may be used:

 

Rigorous Specifications 

U.S. grade No. 1, minimum 85% hard vitreous kernels

Moisture, maximum 12%

Maximum shrunken and broken kernels 1.0%

Falling number 325, no sublot below 300 seconds

Protein, minimum 13.5%, no sublot below 13.2% ( 12% moisture basis)

Dockage, maximum 0.7%, all deductible from contract weight with reimbursement for freight and insurance on dockage

 

Relaxed Specifications

U.S. grade No. 2, Hard Amber Durum (HAD) or better

Damaged Kernel content, maximum 3%

Sprouted Kernels, maximum 0.5%

Moisture, maximum 13.0%

Falling number, 250 average, no sublot below 225 seconds

Protein, minimum 13.2% average (12% moisture basis)

Dockage, maximum 1% average, all deductible

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