Grains
The specification is not the contract. The determination clause is.
Milling and feed wheat, corn and barley on GAFTA terms. Grain is alive when it is loaded and it changes on the voyage — so the clause that fixes where and by whom quality is determined is worth more than every number above it.
The desk
Grain arrives different from how it left. The only question is who agreed to own that.
A cargo of wheat is a living, respiring biological mass. It carries moisture that migrates, insects that hatch, and enzyme systems that keep working. Over three weeks in a warm hold, a parcel that met specification at loading can arrive with a higher moisture in one part of the stow, a lower falling number, and an infestation that was eggs when the hatches closed.
None of that is fraud and most of it is nobody's fault. It is simply what grain does. Which is why the most valuable sentence in a grain contract is not the protein figure — it is the one that says quality and condition are final at loading, or final at discharge, or final at loading for quality and at discharge for condition, as determined by a named independent superintendent whose certificate binds both parties.
Get that clause right and a disappointing outturn is a commercial event with a known owner. Get it wrong, or leave it out, and you have a dispute with no floor to stand on and an arbitration in front of you. We agree the determination clause before we discuss the specification, on every grain enquiry, and we will tell a buyer plainly when the terms they have been offered leave the risk somewhere they have not noticed.
Contract forms
GAFTA, and why a standard form is a benefit rather than a formality.
The Grain and Feed Trade Association publishes contract forms that have been argued over for more than a century. Almost every question that can arise on a grain cargo has already arisen, been litigated, and been written into a clause.
The form is chosen, not assumed
Different forms cover CIF and FOB, bulk and bagged, and different origins. Naming the form and its edition in the contract fixes several dozen questions at once — and "as per GAFTA" without a number fixes none of them.
Determination and analysis
The form provides for quality and condition determined by a superintendent at the contractual point, with sampling to the association's own rules and sealed samples retained. Both parties are bound by that certificate, which is precisely the point of using it.
Arbitration, with time limits
Disputes go to GAFTA arbitration in London, and the forms impose short claim and appointment deadlines. Those deadlines are real: a good claim presented late is a lost claim, and this is where inexperienced parties most often lose money they were entitled to.
Prohibition and force majeure
Export bans and restrictions are a live feature of the grain trade, not a theoretical one. The forms set out what happens when a government intervenes between contract and shipment, and that allocation is worth reading before you need it.
Default and damages
How a non-performing party's liability is calculated, and against what market price. Written in advance, it is arithmetic; written afterwards, it is litigation.
FOSFA where it fits
Oilseeds and vegetable oils trade on the Federation of Oils, Seeds and Fats Associations forms instead. See Oilseeds and Edible Oils & Dairy — the two regimes are similar in shape and different in detail, and mixing them up in a contract is a real error.
The parameters
Nine lines, and one of them is not a quality measure at all.
These are what we report per cargo. The last two describe what the mill or the feeder will actually experience rather than what the grain contains.
| Parameter | What it governs |
|---|---|
| Protein | On a stated moisture basis — usually dry matter or a nominated moisture — because the same wheat reports differently on different bases. The headline milling parameter, and the one most often quoted without its basis. |
| Moisture | Storage stability, weight, and everything that goes wrong in a hold. It is also the parameter a seller has the most to gain from, so it is determined rather than declared. |
| Test weight (hectolitre weight) | Bulk density, and a decent proxy for grain soundness and milling yield. A cheap measurement that tells a miller a great deal about what to expect. |
| Falling number | Alpha-amylase activity — see below. The single most important parameter for a bread wheat, and the one that can change on the voyage. |
| Foreign matter and admixture | What is in the cargo that is not the grain contracted for. Defined and limited separately, because "impurities" as a single figure hides which kind. |
| Broken and shrivelled grains | Milling yield and handling behaviour. Also an indicator of how hard the grain has already been handled before it reaches you. |
| Sprouted and heat-damaged grains | Sprouting destroys baking quality; heat damage indicates the grain has already been through a storage failure. Both are counted, not estimated. |
| Mycotoxins | Deoxynivalenol, zearalenone, ochratoxin A and the aflatoxins as the destination requires. See below — these are legal limits, not quality preferences. |
| Live infestation | A pass or fail rather than a number. Live insects at discharge can mean rejection, fumigation at somebody's cost, or a quarantine hold, and no amount of good analysis compensates. |
Falling number
The one parameter that can be right at loading and wrong at discharge.
The Hagberg falling number measures alpha-amylase activity by timing how long a stirrer takes to fall through a heated flour and water slurry. High enzyme activity thins the slurry, the stirrer falls faster, and the number is low.
- Why a miller cares
- Alpha-amylase breaks down starch. Too much and the loaf is sticky-crumbed and collapses; too little and the bread is dense and pale. Bread wheat is bought to a floor — commonly in the region of 250 seconds, with the exact figure set by the miller's process — and a wheat below it is a feed wheat at a feed price, whatever its protein.
- Where the enzyme comes from
- Pre-harvest sprouting. Rain on a ripe standing crop starts germination, the grain produces amylase, and the falling number drops. This is why a wet harvest in an origin moves the milling premium in a way protein alone does not explain.
- Why it is a determination-clause problem
- Because the enzyme is still there. Grain that gets damp in a hold, or that was marginal at loading, can test lower at discharge. So a wheat bought "final at discharge" on falling number is a materially different risk from the same wheat bought final at loading, and the price should reflect which one you agreed to.
- What we do
- Report falling number at loading with the sampling documented, and where a buyer's process has a hard floor we say plainly which basis of determination we recommend and why. On marginal parcels we would rather sell it as what it is than as what it was on the day it was sampled.
Contaminants
Legal limits, not commercial preferences.
Mycotoxins are produced by moulds in the field and in storage. Unlike most quality parameters, exceeding them does not produce a discount — it produces a cargo that cannot lawfully be sold for its intended use in the destination.
| Contaminant | EU maximum level, unprocessed cereals | What it indicates |
|---|---|---|
| Deoxynivalenol (DON, vomitoxin) | 1,000 µg/kg for unprocessed cereals other than those with their own entry | Fusarium head blight, driven by wet weather at flowering. The most common mycotoxin issue in temperate wheat, and the one most likely to appear in an otherwise clean cargo. |
| Zearalenone | 100 µg/kg for unprocessed cereals | The same Fusarium infection. Oestrogenic, so it matters particularly in feed for breeding stock, and it often travels with DON. |
| Ochratoxin A | Set separately by product category | A storage mould toxin. Its presence points at how the grain was stored rather than at how it was grown, which is useful information about a supply chain. |
| Aflatoxins | Set by category; for groundnuts and oilseeds, B1 in the range 2.0–8.0 µg/kg and total 4.0–15.0 µg/kg depending on the processing the product will undergo | Warm-climate origins and poor drying. Most relevant to maize and to oilseeds rather than to temperate wheat. |
In transit
What happens between the two certificates.
Condition, as distinct from quality, is what the cargo is like on arrival — sound, sweet-smelling, free-flowing and free of live insects. It is where most grain claims actually live.
- Ship's sweat and cargo sweat
- Warm moist air in a hold meeting a cold steel deckhead condenses and rains back onto the cargo, crusting the surface. Or the cargo itself warms and drives moisture upward. Both are managed by a ventilation regime, and that regime should be agreed and recorded rather than left to the master's discretion and argued about later.
- Hold cleanliness and previous cargo
- Certified before loading, with the previous cargo declared. Grain picks up odour and residue readily, and a hold that carried a strong-smelling cargo can taint a parcel beyond use without changing a single analytical figure.
- Infestation and fumigation
- Inspected at loading. Where fumigation is applied, the fumigant, the dosage, the exposure period and the ventilation before discharge are all documented — and the destination's residue limits checked first, because some fumigants are unacceptable in some markets.
- Phytosanitary certification
- Issued by the exporting country's plant protection organisation to the destination's requirements, which are specific and occasionally surprising. Established before shipment, not at the border.
- GMO status
- Stated per contract, with the testing regime named where the destination regulates it. On maize and soy this is a market-access question rather than a quality one.
Pricing
A futures price and a basis, and the basis is the trade.
Grain prices off liquid futures markets plus a differential for origin, quality and delivery point. Both halves move, and confusing them is the commonest analytical error in this market.
- The futures leg
- Chicago wheat, corn and soybeans; Euronext milling wheat and corn for European origins; and regional contracts elsewhere. Which contract and which delivery month belong in the formula, not just the commodity.
- The basis
- The differential between the futures price and the actual cargo — origin, protein, delivery point and timing. It reflects local supply, freight and export capacity, and it can move sharply while the futures price sits still. A buyer watching only the screen is watching half the price.
- Quality premiums
- Milling over feed, protein scales with a per-point rate, and falling number as a pass or fail rather than a slope. State the scale rather than the single reference point, or the parties are agreeing to different things.
- Export policy risk
- Export taxes, quotas and outright bans are a recurring feature of this trade. The contract form allocates that risk; know which way before you sign, because it is the difference between an inconvenience and a total loss.
- What to fix
- The futures contract and month, the basis, the protein scale and its rate, the determination clause, and the weight basis. In roughly that order of how much money each one moves.
Scope
Where our obligation ends.
- What we supply
- Milling and feed wheat, corn and barley — feed and malting — in bulk vessel and containerised lots, on GAFTA terms, with independent determination at the contractual point.
- What we do not do
- We do not farm, store or mill, we do not operate elevators or terminals, and we hold no equity in production. We do not offer hedging and we do not advise on the futures position.
- The determination clause
- Agreed before the specification, in writing, with the superintendent named. We will not accept an arrangement where quality is determined by the seller, and we will not ask a buyer to accept one.
- Mycotoxins
- Tested against the destination's limits for the intended use before shipment. Where a parcel cannot meet a food limit we will say so and offer it as feed if that works, rather than shipping it and discovering the problem at the border.
- Export policy
- We do not trade around export restrictions. Where an origin's government prohibits or restricts a shipment we treat that as binding, whatever the contract says about force majeure.
How to specify
Seven lines, and the first is the one that decides everything else.
Most grain enquiries arrive with lines two to seven and none of line one.
Determination basis
Final at loading, final at discharge, or split between quality and condition — and the superintendent. Say it even if you assume it is standard.
Grain, grade and use
Milling or feed wheat, corn, feed or malting barley; and the food or feed use, which sets the contaminant limits.
Specification and basis
Protein with its moisture basis, moisture, test weight, falling number floor, admixture, broken and sprouted limits.
Contaminant ceilings
DON, zearalenone, ochratoxin A and aflatoxins as your destination requires, plus pesticide residue and fumigant limits.
Origin and GMO
Acceptable origins, and GMO status with the testing regime if the destination regulates it.
Quantity, vessel and basis
Tonnes with tolerance, the vessel size your berth takes, load and discharge rates, FOB or CIF, and the shipment window.
Contract form and pricing
The GAFTA form and edition, and the futures contract, month, basis and protein scale.
Inspection
The certificate the whole contract rests on.
Everything above turns on one document: the superintendent's certificate at the contractual point of determination. It binds both parties, it is not reviewable because one side is disappointed, and it is only as good as the sampling behind it. So the sampling is where the attention goes.
- Appointment
- A superintendent appointed for the cargo — SGS, Bureau Veritas or Intertek — instructed jointly and named in the contract. Not appointed by the seller, not appointed by the buyer, and not chosen after loading has started.
- Sampling
- Continuous increment sampling during loading to the association's rules, with increment number and mass, division and preparation recorded, and sealed retained samples held for the claim period. A parcel sampled from the top of a stockpile or from a single point in the stream has not been sampled, and a certificate built on that is worth what the sampling was.
- The analysis suite
- Protein on its stated basis, moisture, test weight, falling number, foreign matter and admixture, broken, shrivelled, sprouted and heat-damaged grains, each counted or measured by the named method rather than estimated.
- Contaminants
- Deoxynivalenol, zearalenone, ochratoxin A and aflatoxins to the destination's limits for the intended use, plus pesticide residues and fumigant residues. The sampling plan documented alongside — mycotoxins are distributed very unevenly through a lot, so a composite of many increments is the difference between a result and a guess.
- Condition
- Holds inspected, cleaned and certified before loading with the previous cargo declared; the cargo checked for live infestation; ventilation regime agreed with the master and the vessel's record obtained; cargo photographed at load and at discharge. On a split determination, condition at discharge is a separate exercise from quality at loading and both need their own evidence.
- Quantity
- Draught survey at load and discharge with the governing survey named, and shore-scale figures where available. The weight basis and any franchise stated, so an outturn shortfall is measured against something agreed in advance.
- Documentation per cargo
- Certificate of quality with every guarantee on its stated basis, certificate of condition, weight certificate, mycotoxin and residue certificates, phytosanitary certificate, fumigation certificate where applicable, GMO statement, certificate of origin, hold cleanliness certificate with previous cargo declaration, bill of lading and the superintendent's report with photographs.
Straight answer
What we will tell you before you ask.
- That the determination clause outranks the specification
- Grain changes on the voyage. Whether quality is final at loading or at discharge decides who owns that change, and it is worth more than any single number in the contract.
- That falling number can fall in transit
- The enzyme is still active. A marginal bread wheat bought final at discharge is a different risk from the same wheat bought final at loading, and the price should say so.
- That protein without a basis is not a figure
- Dry matter or a nominated moisture. The same wheat reports differently on each, and the gap is bigger than most negotiations.
- That mycotoxin limits are legal, not commercial
- Over the limit is not a discount, it is a cargo that cannot lawfully be sold for that use. We test against the destination before shipment and offer the parcel as what it actually is.
- That the GAFTA time limits are real
- A good claim presented after the deadline is a lost claim. If you are working to an unfamiliar form, that is the part to read first.
Enquiries
Every enquiry is answered by the desk that handles it.
Send the product, quantity, delivery basis, destination and timing. We revert with availability, an indication and the documentation that accompanies it. Specifications are released once we know who we are speaking with.