This study analyzes implications of a random quality factor, vomitoxin, on spatial flows and merchandising risk. Vomitoxin poses major risks for grain traders because of contract specifications, regulatory limits, sampling difficulties, and imprecise measurement. The effect of these were analyzed using crop quality and market data for the U.S. spring wheat crop, which has been severely affected by vomitoxin infestations during the 1990s. The analysis was structured as a blending problem with the objective of maximizing the net value of wheat sales. Relationships among market price spreads and contract specifications are interesting and their effects are demonstrated through simulations. I n many grain markets, price relationships, merchandising strategies, and spatial flows are influenced by quality factors. This is caused by the diverse quality requirements of foreign and domestic end users and variation in quality characteristics across producing regions. Heterogeneity in supply and demand for characteristics is a critical feature of grain handling and merchandising. Elevators segregate grain based on quality factors and enhance margins through blending and conditioning activities. Traders assemble grain from different producing regions with different quality characteristics to satisfy needs of individual buyers and to capture price premiums.However, quality variability creates uncertainty and risk for grain merchandisers. Interest on this topic was heightened by experiences during the 1990s in the spring wheat and barley markets. Weather conditions in 1993 led to a severe