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Forward pricing is a marketing tool available to Pacific Northwest white wheat growers for reducing price risk. The cash forward contract is the traditional pricing mechanism used for this purpose. In September 1984, another option for forward pricing was made available through the introduction of a new futures market for white wheat traded at the Minneapolis Grain Exchange. This research analyzes price behavior in these two forward pricing markets in 1985 from two perspectives. Using the efficient market hypothesis, this study first evaluates the temporal price relationships in each market. Second, the research measures the relationships between the two markets in light of the concept of causality. Prices in an efficient market should reflect all available information. In this research, the weak form test for the efficient market hypothesis, known as the random walk model, assessed pricing efficiency in both markets. The random walk hypothesis holds when successive price changes are independent. Based on the evidence of statistically insignificant autocorrelation coefficients, the futures market was efficient under the random walk hypothesis. There were no systematic patterns in the price movements. In contrast, in all delivery time periods except December, the cash forward market exhibited nonrandomness in price changes. The analysis on the relationship between the two markets was made using Granger's definition of causality. Using ordinary least squares regression, this research evaluated the causal link between the two price series with two parallel tests, the direct Granger's and the Sims'. Strong causality ran from futures prices (FT) to cash forward prices (CF) in the September harvest time delivery period. Some causality from FT to CF lingered into the December and March storage month delivery periods. There were no causal relationships in other delivery periods except a feedback from CF to FT in the March period. Despite low trading activity, futures prices were found to represent an efficient market. Thus, they accurately reflected market signals concerning the supply of, and demand for, white wheat. On the contrary, nonrandomness found in cash forward prices suggests inefficiency in this market. The causality found from FT to CF is consistent with the expectation. Farm level forward pricing activity is greatest for harvest (August/September) and immediate post-harvest delivery months. This causes buyers of cash forward contracts to pursue price risk management. Thus, futures prices were used as references, or hedges, in setting cash forward prices in these delivery time periods. The irregular causality pattern between the two markets implies a changing market environment, possibly caused by differing price determination processes over time. Serial dependence in cash forward prices may be providing misleading signals about the white wheat market. However, the weak form test used here could not estimate the magnitude of the inefficiency. / Graduation date: 1987

Wheat is a major agricultural product in the Pacific Northwest (PNW). The market class primarily grown in the region is Western White (WW) wheat. An important export market for PNW wheat producers is the Asian Pacific Rim (APR), due to its proximity and economic growth. Agronomic research has been conducted in recent years on developing a higher protein wheat in the PNW, known as Hard Red Winter (HRW). The justification of this research is that PNW wheat producers could perhaps become more competitive by diversifying toward HRW wheat. The higher protein levels of HRW allow it to be used as a meat complement, producing sandwich breads and hamburger buns. The lower protein levels of WW limit its final products to be cereal-based, such as noodles and crackers. Cross-sectional studies have indicated a change in dietary composition as economic development occurs. Countries seek improved and varied diets. They move away from cereal products such as noodles and rice, and consume more livestock products, especially meats. The objective of this research is to ascertain whether or not a higher protein wheat (HRW), which can be used as a meat complement, becomes more income sensitive than wheat with cereal-based end uses (WW) when economic development transpires. Import demand equations were estimated for a selected group of APR countries for the two wheat classes. The estimation was conducted using Ordinary Least Squares and Seemingly Unrelated Regression. The data period was from 1970-1971 to 1985-1986. Only one country, South Korea, produced significant results to permit comparison of the income sensitivities for the two wheats. Both HRW and WW possessed negative income coefficients, this would suggest that South Korean consumers perceived the final products from which the demand for the two wheats are derived as inferior goods. This means that HRW and WW wheat imports would fall as income rose for South Korea. However, the food self-sufficiency policy of the South Korean government was advanced as a probable reason for the negative coefficients rather than a diminishing marginal propensity to consume food items caused by income growth. / Graduation date: 1989

The volatile flavor fraction of lightly milled wheat grown in eastern Oregon was isolated for study by two methods: steam distillation under vacuum and steam distillation at atmospheric pressure. The sample obtained under vacuum was extracted with ether which was then evaporated to yield the desired wheat essence. Steam distillation at atmospheric pressure provided the headspace vapors that were used for a portion of the gas chromatographic analysis. Identification of the organic substances contained in the volatile flavor fraction was made on the basis of chemical tests, paper chromatography, gas-liquid chromatography, and mass spectrometry. Preliminary testing for amines and carbonyls indicated the presence of both of these functional groups, although in subsequent research amines were not detected. Additional information as to the functional groups present was obtained by subjecting headspace vapor samples to gas chromatography and directing the column effluent into vials containing reagents selected to indicate the presence of alcohols, amines, esters, carbonyls, and mercaptans. A separate set of reagents was used for each eluting peak. Formation of 2, 4-dinitrophenylhydrazone derivatives and determination of their melting points provided one means of tentative identification of carbonyl compounds. Ascending paper chromatography was used to separate the 2, 4-dinitrophenylhydrazone derivatives of the carbonyls into classes and to ultimately assist in the identification of these compounds. A Barber-Colman gas-liquid chromatograph equipped with a flame ionization detector was used as a means of separating the components in the samples. Identification of some of the compounds was possible through comparisons of retention times of the peaks on these columns with retention times of known compounds. Column packings used for gas-liquid chromatography were six percent Apiezon M, six percent Diethylene Glycol Succinate, and three percent Free Fatty Acid Phase, all on a solid support of Anakrom ABS, 90 to 100 mesh. The column was heated isothermally at 75°C with nitrogen as the carrier gas flowing at a pressure of five pounds per square inch. Mass spectra of the wheat essence compounds were obtained by use of an Atlas-MAT Ch-4 mass spectrometer using a two second scan, coupled with a gas-liquid chromatograph. Twelve compounds were identified and six were tentatively identified in the headspace aroma or in the wheat flavor essence. Those identified were acetaldehyde, isobutyraldehyde, butyraldehyde, valeraldehyde, hexanal, heptanal, octanal, crotonaldehyde, 3-methyl-2-butanone, 2, 2-dimethyl-3-pentanone, diacetyl, and ethyl acetate. The compounds tentatively identified included isoamyl alcohol, amyl alcohol, butanone, isovaleraldehyde, cyclopentanone, and phenylacetaldehyde. / Graduation date: 1968

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