China Admits Drought Impact; Proclaims Bumper Wheat Harvest

Another bumper wheat crop of 138.16 million metric tons was proclaimed for 2025 in the "summer grain" report released by the National Bureau of Statistics. A Bureau official said the bumper harvest lays the foundation for stabilizing the year's grain output and will help China cope with the "complex and severe international situation" while promoting recovery of the economy.

The Bureau acknowledged that serious drought impacted wheat production in Shaanxi, Henan, and Jiangsu provinces but insisted that irrigation and other mitigation minimized losses. Production increased in Sichuan, Shandong, Hebei, and Hubei Provinces. An adjustment in cropping structure reduced wheat output in Xinjiang. National wheat production was down 167,000 metric tons from the previous year, a decline of less than -0.1%, according to the Bureau. 

China's Summer Grain production, 2025
Category	Item	Unit	2025	Change
Summer grains	Production	1000 metric tons	149,738.0	-153.0
	Area	1000 hectares	26,578.4	-34.7
	Yield	KG per hectare	5,633.8	1.6
of which: Wheat	Production	1000 metric tons	138,160.0	-167.0
	Area	1000 hectares	23,073.3	-17.4
	Yield	KG per hectare	5,987.9	-2.7
Summer grains include wheat, barley, oats, buckwheat, beans, cow peas, potatoes.
Source: China National Bureau of Statistics.

The Bureau said winter wheat comprised 134.5 million metric tons of the year's wheat harvest and 22.6 million hectares of wheat area. 

Other summer grains include barley, oats, buckwheat, beans, and cow peas. Overall summer grain output was 149.7 million metric tons, down 153,000 metric tons from last year. A Bureau official explained that summer grain planting was down slightly due to some switching from summer grains to fall-harvested crops. Note that China only reports planted area, not harvested area. Yields are measured by taking cuttings just before harvest; it is unclear whether survey teams would measure yields from fields where crops had failed due to drought.

The Bureau official credited Xi Jinping's leadership and local officials' implementation of food security responsibilities for the bumper harvest. The official cited the minimum price purchase policy, the cultivated farmland protection subsidy for grain farmers, crop insurance subsidies, high-standard field construction, and a spring crop-spraying program for shoring up production. 

This year's relatively low prices indicate that China has plentiful wheat supplies. China's Food and Commodity Reserve Administration data shows average wheat procurement price July 1 was about 3 percent below their level from last year. However, there has been no drop in wheat prices following the harvest that is common in normal years. The average flour price is about 4 percent below the year-ago level. The Administration has reported the same flour price for nearly 3 months.

Data from China National Food and Commodity Reserve Administration.

An Economic Daily commentary reported that 50 million metric tons of wheat have been procured so far this summer. Henan, Anhui, and Hebei Provinces have purchased a combined 1.6 million metric tons of wheat--less than 4 percent of the total procured--at the government-set minimum price to assure farmers that prices will not fall any lower. The commentator explained that the minimum price is now set every two years to build in long term expectations and prevent fluctuations and speculation.

What is this Chinese company that spawned a National Farm Security Initiative?

The Fufeng Group's acquisition of a 300-acre site in North Dakota to build a corn processing plant is routinely cited as proof that "China" has a plot to buy up American farmland. Fufeng's project was denied approval by Grand Forks officials based on concerns about spying, but its North Dakota land purchase became part of the narrative has led to growing restrictions on Chinese land ownership in the U.S., including yesterday's announcement of a National Farm Security Initiative at USDA headquarters attended by multiple cabinet secretaries. 

Since we're going to create a new national security policy based on our fear of such companies, maybe we should investigate who Fufeng is and what they're up to.

You probably have never heard of Fufeng Group (pronounced foo-fung), a company with 17,000 employees headquartered in Qingdao China that manufactures food and agricultural chemical products by fermenting corn. You may have heard of Fufeng's main product, monosodium glutamate (MSG), because it makes you dizzy when you eat at a Chinese restaurant. But you probably have never heard of xanthan gum, a thickening agent used in both food processing and petroleum refining. 

Lysine and threonine are the products Fufeng planned to manufacture in a U.S. facility. These are amino acids added to animal feed to aid in synthesis of protein in meat animals. These products are widely used in livestock production all over the world. Fufeng produces lysine and threonine at its facilities in northeastern China and sells them to both domestic and foreign customers. As we will discuss below, China is aggressively promoting use of amino acids in order to reduce use of soybean meal in feed.

China imported amino acids until the early 2000s. Now Chinese companies produce about 80 percent of the world's lysine and 95 percent of threonine, and Fufeng is a secondary player in both of these crowded industries. Fufeng is currently in the second tier of 10 major lysine producers in China. Fufeng is one of the top three threonine producers, but the industry leader's market share is about double Fufeng's. Fufeng is struggling to climb to the top of the heap in the hypercompetitive but mostly anonymous feed additive industry.

Fufeng is a privately-owned company publicly traded on the Hong Kong stock exchange and registered in the Cayman Islands. State-owned companies like COFCO, Bright Foods, Beidahuang, or the Xinjiang Production and Construction Corps have niches they dominate, but most of China's agriculture and food sector is composed of smaller private companies like Fufeng. 

In the 1990s a young employee of a small-town distillery, Li Xuechun, started the company by pooling funds with co-workers to buy a bankrupt MSG workshop next door. According to Li's account, he built the company to a national player in the MSG industry by buying up equipment from other bankrupt factories, aggressively cutting costs and engaging in brutal price wars. The company's annual report cites the plan to open a U.S. manufacturing facility as part of its ambition to become a multinational company. Despite these ambitions, the English version of its web site does not appear to work. The company's management is a family affair: Li Xuechun, his brother-in-law, and his son make up the company's top management team.

Fufeng's founder joined the communist party in 1985, but an online search turns up no other involvement in the party. There is no mention of a communist party organization in the company on its web site. Fufeng does not mention China's policy of promoting foreign investment (so-called "going out"), nor does it mention the Belt and Road Initiative. Still, no business can succeed in China without government and party ties. It is likely that Fufeng has received help over the decades that is left out of its official history--getting its listing in Hong Kong, its designation as an agricultural "dragon head enterprise", model technological company, environmental protection awards, and land acquisitions in China. 

American commentators and officials see China as a masterfully planned well-oiled machine ready to take over the world. In reality, Chinese industry is quite chaotic and hyper-competitive. Industrial policies often fall flat, and policies meant to protect one sector are often impediments to other sectors.

Fufeng produces chemicals made by fermenting corn, which currently accounts for about 55-to-60 percent of its production cost. Fufeng caught a wave of Chinese government support for corn processing industries in the early 2000s. The government lavished subsidies on the industry to chew through a glut of corn that had built up in the late 1990s. The glut was gone by 2006-07 when global grain prices spiked. The subsidies for corn processors were phased out as corn supplies became tight. The subsidies were revived during 2017-19 to dispose of another corn glut. 

Meanwhile, Chinese officials are fixated on controlling grain imports to promote self-sufficiency. A quota system aims to control imports of corn by forcing private companies like Fufeng to import corn mainly through a state-owned company that controls 60 percent of the quota. During years of high prices in 2020-23 authorities permitted large imports of corn, but China has slashed corn imports this year by about 80%. 

Chinese authorities try to manage grain prices to balance the profits of farmers against interests of livestock producers and companies like Fufeng that use corn as raw material. But ultimately China's grain policy limits access to imported corn for Fufeng and forces them to pay premium prices for raw material. Fufeng mainly processes corn procured in northeastern China at prices 40-to-50 percent higher than in the U.S. corn belt. Current corn prices in Heilongjiang and Inner Mongolia--sites for Fufeng's manufacturing facilities--are currently $7.60 to $8.00 per bushel versus about $4 per bushel in Illinois. 

Thus, the prospect of cheaper corn is a motivator for Fufeng to build a facility in the United States to serve its overseas customers. After being rejected by Grand Forks, Fufeng is now considering a site in corn-rich central Illinois for its U.S. manufacturing facility.

A more recent Chinese government initiative appears to directly benefit Fufeng's amino acid business, but the results have been underwhelming. In April 2023 China's Ministry of Agriculture and Rural Affairs (MARA) announced a 3-year action plan to promote use of amino acid additives in livestock feed in order to reduce inclusion of soybean meal. The objective is to reduce reliance on imports of soybeans and thus insulate China from reliance on the United States. Fufeng does not mention this initiative in its report or web site. Other company reports and industry analyses do cite the MARA initiative as an important factor in the amino acid additive business, but they stop short of pronouncing it to be a great business opportunity. 

MARA claims great success in substituting amino acids for soybean meal since the action plan started, but Fufeng's business performance does not indicate any amino-acid sales boom. Fufeng's revenues have been stagnant since 2022. Fufeng's 2024 annual report credited growth in exports of lysine and threonine for boosting its amino acid business during 2024 as domestic demand weakened. Fufeng's lysine sales volume fell 2.5% in 2024, the second year of the amino acid action plan. Meanwhile, China's exports of lysine were up 15%. Fufeng's threonine sales volume was up 14% in 2024, but exports of threonine were up 26%. Fufeng's competitor, Meihua Group's 2023 annual report reported a similar pattern of declining prices and sales for domestic lysine and strong export sales. Despite the MARA initiative to push use of amino acids, Chinese lysine prices dropped dramatically in the first half of 2025, according to a semiannual industry report from Chinese consultancy Boyar. 

MARA announced the amino acid action plan just before soybean meal prices crashed. Since 2023 Chinese soybean meal prices have plummeted about 30 percent, undermining the economic incentive to cut back on its use. 

Like many other Chinese industries, Fufeng and other producers of corn fermentation products expanded capacity at a frenetic pace, leading to price wars and a flood of cheap products that took over European, American and Asian markets. The U.S. and EU already had antidumping duties on Chinese MSG. Even Vietnam has antidumping duties on Chinese MSG. The blip in Chinese lysine exports during 2024 probably reflected European buyers trying to get ahead of EU antidumping duties on Chinese lysine that took effect January 2025. The U.S. launched an antidumping investigation of Chinese lysine in May 2025.  According to a U.S. Department of Commerce's antidumping announcement U.S. imports of Chinese lysine more than doubled in volume from 29,066 metric tons in 2022 to 77,934 metric tons in 2024. 

The corn fermentation products Fufeng produces are not a new innovation. They were developed and popularized during the late 20th century by a group of multinational companies based in North America, Japan, and Europe. Three of those companies filed the petition for the lysine antidumping probe in May. Interestingly, the Illinois site now being considered by Fufeng is practically in the backyard of one of the U.S. companies.

In another rhyming of history, Chinese amino acid companies appear to have engaged in the same kind of price-fixing behavior that prompted prosecutions and jail for a U.S. lysine producer in the 1990s (immortalized in the 2009 film The Informant!). According to the 2023 annual report of Meihua Group (Fufeng's competitor) the top 4 threonine producers (which would include Fufeng) agreed to fix prices after European customers cut their purchases during 2023: 

"To improve the profitability of the industry, the leading enterprises raised the price and adopted a strategy of tie-in sales. The market price of threonine was adjusted to a higher level from the third quarter onwards, causing the whole industry to make profits."

Colluding to fix prices is probably legal in China unless foreign companies do it. (In past years there were other cases where Chinese food companies agreed to price-war truces and fixed their prices at a level that would avert a U.S. antidumping investigation.)

This post is not intended to give unqualified approval to Fufeng Group or any other Chinese investor. However, by looking into Fufeng's business environment it becomes evident that the company has strong incentives besides spying to invest in a U.S. facility: to access cheap corn and overseas customers, avoid antidumping duties, and as a means of climbing to the top of the heap in a crowded, hyper-competitive industry. Spying and intellectual property theft are real threats, and in the business world it's hard to put full trust in anyone. 

Both U.S. and Chinese officials need to recognize that food markets are a lot more complex than they realize, and most of what's happening now has happened before. Ironically, with so much information available at our fingertips, in-depth research and verification of claims seems to have fallen by the wayside. It is much simpler to make national policy based on internet memes and simplified black-and-white narratives. 

Dairy imports crash as China struggles with milk glut

China's imports of milk powder have been plummeting after the country created a glut that caused Chinese milk prices to plummet 30% over the last 4 years. Subsidies stimulated expansion of China's dairy industry at the same time growth in Chinese milk consumption shifted into reverse. Imports of value-added products such as cheese and whey protein have been more robust until now, but replacing these imports is one of the main solutions Chinese dairy industry leaders are pursuing to pull the industry out of its crisis.

China's agriculture ministry held a symposium in Beijing on June 25 to discuss how to rescue China's dairy industry from plunging prices and financial losses. While it appears that excessive subsidies got the industry into the predicament in the first place, Minister of Agriculture Han Jun prodded local officials to pursue a lengthy menu of support measures that include farm and processor subsidies, credit support, breeding improvements, efforts to boost dairy consumption, and a push into value-added dairy products. 

This month's meeting comes 10 months after a similar meeting to revive the dairy and beef sectors was held in August 2024. The communist party's document no. 1 on rural policy in January 2025 called for bailouts of the dairy and beef sectors. Minister Han noted that the beef industry has seen some improvements after the Ministry of Agriculture and Rural Affairs (MARA), other departments and local authorities issued policies to rescue the two sectors. Still, Han described revival of the dairy industry as an "arduous task." 

China's milk prices continued dropping over the past year. At a February 2025 seminar on dairy industry problems held in Henan Province a dairy expert worried that there was no sign of a halt to plummeting milk prices. He judged the February milk price to be well below the cost of production. 

Prices have continued to fall since then. As of late June 2025 the average price of fluid milk was down 30 percent from its 2021 peak. Beef prices have since rebounded about 7 percent after bottoming out in March 2025. 

Average wholesale prices, China Ministry of Agriculture and Rural Affairs.

Industry experts have declared that dairy is the segment of the livestock sector suffering from the most serious difficulties, the lowest prices, the most widespread losses, and has the longest adjustment cycle. 

Experts say the dairy industry has a structural supply glut. The February seminar noted a big influx of large-scale dairy operations that has expanded capacity at the same time dairy consumption has been dropping since 2022. The government and industry are promoting production and consumption of pasteurized fresh milk as an import substitution measure meant to replace shelf-stable UHT milk produced from imported milk powder that has long dominated the industry.

The Dim Sums blog has previously highlighted the 2018 dairy revitalization initiative that kicked off the expansion, followed by a frenzy of investments by regional dairy companies that created excess capacity. The February seminar noted that Henan, Inner Mongolia, Gansu, Heilongjiang, Hebei and Shandong Provinces all issued multiple dairy industry promotion policies such as subsidies and awards, injections of bank loans in the guise of poverty alleviation, and milk advertising and promotion. 

Inner Mongolia is China's largest dairy region and home base for its largest dairy companies Yili and Mengniu and has provided perhaps the most extensive support. Inner Mongolia began with a menu of 7 dairy support policy measures in 2019 that expanded to 33 dairy measures in 2023, including 

• payments for area planted in corn silage and alfalfa, 
• subsidies proportional to number of cattle for newly built dairy farms of 3,000 head or more. 
• a per-head subsidy for imported dairy cows, 
• a subsidy covering 10% of equipment costs for newly built cheese and whey processing plants
• a subsidy for purchasing raw milk during the off-season
• 100 million yuan fund for research and development
• disease prevention and breeding programs

Inner Mongolia recently issued new subsidies for loans, insurance for raw milk, extended a subsidy for manufacturing milk powder, and added to support for breeding and processing.

After years of pushing policies that created excess capacity, this month's MARA meeting called for culling cattle to relieve China's milk glut.

At the February seminar it was noted that special safeguard tariffs for beef launched in 2024 have helped the dairy sector cut back on excess capacity. The safeguard encouraged culling of low-productivity dairy cows by slaughtering them for beef. The Dim Sums blog also observed a noticeable surge in rejections of imported beef shipments during 2024 that coincided with the beef rescue.

A May 2025 China Dairy Industry Association meeting judged that China's consumption of basic milk products has hit a bottleneck and may have peaked. At the meeting it was reported that per-capita milk consumption had declined 5.6 percent in 2024 to 41.5 kg. 

The association ignored the excess capacity issue, instead focusing on adjusting product structure to match changes in consumer preferences. Speakers at the May meeting cited a China Food and Nutritional Development Outline for 2025-2030 that encourages consumption of fresh milk (presumably in place of shelf-stable UHT milk) and dry products like cheese. While the industry has long focused on raising China's low per-capita consumption, the industry association called for adjusting the structure of products to include more high value-added products such as ready-to-eat cheese targeted at children, milk tea, products for healthy baking like whipping cream without additives, nutritional supplements targeted at the elderly, weight loss probiotics, and high protein yogurt. 

The analyses of the dairy industry ignore the halving of China's birth rate between 2012 and 2024 (which implies a parallel shrinkage in the number of young children who consume disproportionate amounts of milk). Instead, one analysis speculated that the new generation of mothers in China are more "scientific" and discerning about nutritional content when choosing products for their children. 

The May dairy association meeting noted that imports of milk powder and fluid milk have been declining, but imports of high value-added products such as cream, condensed milk and albumin have maintained their growth. 

Chinese customs data show that imports of milk powder peaked in 2021 at 2.58 million metric tons and fell to 1.36 million metric tons in 2024, a 47-percent decrease over 4 years. Imports for the first 5 months of 2025 are 615,170 metric tons, down 1 percent from the same period in 2024.

China customs administration data.

U.S. exports of dairy products to China peaked in 2022 at over $800 million and fell to $583 million in 2024, according to USDA data. In 2024 U.S. sales of nonfat dry milk were less than 20 percent of their 2022 peak value. Sales of other dairy categories have been up and down. Whey products comprise most U.S. dairy exports to China, and their sales in 2024 were down 7 percent from their 2022 peak value of $406 million. Sales of lactose products were down 35 percent from their 2022 peak. Cheese and other dairy products comprise a small portion of U.S. dairy sales to China, but their sales increased between 2022 and 2024. Sales of whey during the first 4 months of 2025 were up 20 percent from the same period in 2024. Chinese customs data for May 2025 show that China's imports of U.S. whey products were down about 9 percent from a year earlier. 

USDA Global Agricultural Trade System data.

The dairy industry mess reflects the outcome of Xi Jinping's "Socialism with Chinese Characteristics" that boasts of its ability to seamlessly entwine government planning with a market composed of companies working hand in hand with government technocrats. 

The MARA symposium this month was attended by a mix of dairy and biotech companies with ties to provincial or local governments (such as Modern Dairy, Feihe Dairy, Gansu Pastoral Grass Industry Co.), a pair of dairy conglomerates (Yili and Mengniu), provincial animal husbandry departments, university professors, and agriculture ministry officials. 

Chinese socialism treats industrial planning as an engineering task with multiple bells and whistles (monitoring of statistical indexes composed of dozens of inaccurate or fake data series) and buttons and levers bureaucrats can manipulate (subsidies, industry standards, bank loans, access to land and equity markets). The market is carved up into regional chunks with each company approaching local officials to beg for investment while showing them a powerpoint about their company's alignment with the 5-year plan. Favored companies get access to bank loans and equity markets. They never have to worry about going out of business unless they are caught up in a scandal that requires a sacrificial offering or they get in with the wrong political faction. Everyone expands production, impinges on markets outside their region, and cut-throat competition breaks out. 

Meanwhile, no bureaucrat can admit that demand might not follow their projections, nor could they admit that the projections were based on inaccurate or fake data. A downturn in the Chinese economy, plunging birth rates, and the possibility of a raging disease epidemic are definitely not included in the "opportunities and risks" matrix. 

Once they've gone down the alley of creating production capacity that exceeds demand, technocrats improvise by buying up and storing surplus products, raising import barriers, ordering up bank loans to bail out troubled companies, giving companies cash-generating business opportunities in unrelated sectors, etc. These measures become more challenging when many other sectors are facing similar overcapacity problems and only a few coins are left in the piggy bank. 

At this point China's dairy technocrats are desperately pushing buttons and pulling levers. Agriculture Minister Han Jun last week summed up the dairy rescue symposium by ordering local officials to implement subsidies as soon as possible, continue providing credit support, strengthen dynamic monitoring and support for dairy farms, reduce production capacity in an orderly manner, curb new additions of capacity, and boost of producers' confidence. He recommended measures addressing every aspect of the dairy industry:

• use multiple measures to boost milk consumption
• raise peoples' awareness of health benefits of drinking milk
• guide companies to implement the new standard for pasteurized milk
• provinces should promote consumption of milk in schools
• push dairy processors to upgrade their product mix and plant infrastructure to include high-value products
• raise quality across the entire supply chain
• reduce use of grains in dairy farming
• shore up dairy cattle disease prevention and control
• integrate farms with processing companies
• replace imported breeding cattle with domestic cattle
• accelerate a company-led dairy herd improvement mechanism
• vigorously promote breeding R&D 

If this sounds vaguely similar to the North American and European dairy industries during the 20th century, you might conclude that Socialism with Chinese Characteristics is actually not all that unique.

High-tech Hog Companies Enjoy Dip in Feed Prices

Corporate behemoths are gaining a commanding position in China's hog farming sector. In 2024 twenty companies listed on Chinese stock exchanges produced a combined 168 million hogs, 24 percent of China's national hog output reported by the National Bureau of Statistics. The publicly listed hog farming companies had a combined market cap of 615 billion yuan (about $85 billion) in February. These companies claim to have transformed hog farming with their high-tech operations, but they haven't eliminated the volatility that stems from movements in feed prices and profit margins.

Just 3 of those companies account for most of the growth in China's corporate hog sales. Muyuan Foods stands out with hog output growing from 3.1 million to 71.6 million between 2016 and 2024. Wens Foodstuff lost its place as top hog producer despite nearly doubling its hog sales from 17 million to over 30 million head between 2016 and 2024. New Hope's output grew from 1.7 million head to 16.5 million head during 2016-2025. A second tier of companies producing 2-to-6 million head have also grown, but they are far behind the top three. 

Compiled from company reports.

The growth of these companies is surprising in view of the historical dominance of "backyard" hog farms in China. China's disastrous African swine fever (ASF) epidemic in 2018-19 was a catalyst for growth in corporate hog farming, as the epidemic forced out many small and medium-sized farms while policies to restore pork production favored large-scale farms. Agriculture Ministry data show the number of mega-farms producing 50,000 head or more grew from 443 to 849 between 2018 and 2021.

Chinese officials love big companies because they believe the companies are easier to control and have the financial resources to pursue the magical high-tech future envisioned by communist leaders. A string of articles last week lauded high-tech applications made by pig farming companies. 

In a celebration of its anniversary last week, Muyuan Foods proclaimed great success in sterilizing barns to keep them free of disease, controlling odor, and pursuing the agriculture ministry's goal of eliminating soybean meal from animal diets. An executive said Southeast Asian counterparts have been impressed with China's ability to control African swine fever, Muyuan built a high-tech farm for a Vietnamese company, and Muyuan exported deodorization and sterilization equipment to Southeast Asia. 

New Hope Group's executives told China Securities Journal their company is using manure ditch cleaning robots that have autonomous navigation that no longer need to be operated by remote control. Handheld gadgets can weigh pigs, avoiding the need to drive pigs to be weighed on a scale. Another sensor can count the number and weight of live pigs or piglets based on their size and shape without manual counting. One scientist identified as both a New Hope employee and director of a Ministry of Agriculture lab described the use of artificial intelligence in breeding selection, automatic adjustment of ventilation and cooling, as well as choosing the optimal time and weight for releasing pigs to the market. 

Wens Foods says it has collaborated with Huawei since 2021 on application of robots, AI, cloud computing, internet of things, etc. in livestock farming. 

Chongqing Daily described a tech company in Chongqing's Rongchang district as the "brain" of the industry that provides systems for "pig farms of the future." A manager explained that digital solutions using sensors and constant monitoring of the environment, temperature, and feed are superior to traditional manual control based on the "feeling" and "visual observation" of farmers or employees. The article explained that eliminating employees with digital gadgetry allows one worker to raise 3000 hogs, whereas traditional methods required 3 to 5 workers to raise 1000 hogs.

The large hog companies regularly announce reductions in production costs, giving the impression they are making great strides in efficiency. Several years ago, the breakeven price for hogs was widely believed to be about 15 yuan per kg. Muyuan claims to have reduced its production cost to 12.5 yuan per kg this year, and New Hope Group claims to have reduced its cost to under 13 yuan. However, the reductions in cost may actually be due to falling grain and soybean meal prices that have cut feed costs.

A Shandong Province cost of production survey of common farms reported a breakeven price of 13.07 yuan per kg for a 120-kg farrow-to-finish hog in the first quarter of 2025. The Shandong data show that feed comprised over 60 percent of hog production costs (965 yuan of the cost of 1523 yuan per head). 

Agriculture ministry data show that the average cost of hog feed in China has fallen about 15 percent since its last peak in October 20223. All hog producers enjoyed fat profits during 2024 as hog prices rose about 50 percent to their peak of 20.35 yuan in August while feed prices were plummeting. Muyuan and Wens declared two dividends last year. 

Ministry of Agriculture and Rural Affairs market prices.

Profit margins stimulated expansion during the second half of 2024 that drove hog prices down to just 14.6 yuan in June 2025. Muyuan Foods--the largest producer--had the biggest spike in sales.

Hog sales from company reports.

Comparing monthly sales by the top 3 companies with measures of aggregate industry output indicates that expansion in hog production during the second half of 2024 was broad-based. Sales by the top 3 companies was still only about one-third of "above-scale" slaughter (reported by the ag ministry) and about 16 percent of monthly slaughter reported by the National Bureau of Statistics. All three series indicate an expansion of hog output during the second half of 2024, but the increase by the top 3 was only a small fraction of the run-up in industry-wide hog slaughter reported during the second half of 2024. 

Company performance reports; Ministry of Agriculture and Rural Affairs slaughter by "above-scale" facilities; quarterly National Bureau of Statistics quarterly slaughter averaged over 3 months.

Still, not all of the leading companies expanded last year. New Hope--mainly a feed manufacturer--suffered financial losses in 2024, and its hog production fell. New Hope claims to have regained profitability in 2025. Several others reported big declines in hog sales last year, including COFCO Joycome--the one state-owned hog company--and Tianbang and Aonong--two other high-flyers in recent years.

It's worth noting that not all hog farming companies are unstoppable juggernauts. Yangxiang, a company that wowed foreign visitors with its pioneering multi-story hog complex about 8 years ago, faded into the background after its IPO was undermined by unusual dividend payouts and a shady customer base. Chuying, one of the rising stars in 2018 imploded that year and tried to pay back investors with hams. Zhengbang was the number 2 producer in 2021, but its production has plummeted since declaring bankruptcy a couple years ago. Wens foodstuff was hit hard by the ASF epidemic (and by an avian influenza outbreak about 12 years ago) before recovering robustly post-ASF. 

May Imports: Soybean Surge Offsets Crash in Grain and Cotton

China's imports of agricultural products during May 2025 totaled $19.9 billion, almost the same as its imports in May last year, according to Chinese customs data. May was the first month in 2025 that Chinas' agricultural imports did not decrease from a year earlier.

China customs administration definition of "agricultural."

The most prominent changes in China's May 2025 agricultural import bill from a year ago were a $1.13-billion increase in soybean purchases that was offset by a $902-million decrease in cereal grain imports, and a $473-million plunge in cotton imports. Imports of sugar, fats and oils, dairy, cassava, and seafood were up. Imports of fruit, nuts and meat were down year-on-year.

Calculated from China Customs Administration data.

China's imports of Brazilian soybeans soared to 12 million metric tons in May as seasonal arrivals from South America ramped up and inspections at the border accelerated. The May soybean import volume was up almost 3-fold from April, and it exceeded the year-earlier volume by more than 3 million metric tons. Soybean imports from Brazil had been running behind year-earlier volumes during the first 4 months of 2025. Meanwhile, China's imports of U.S. soybeans tailed off to 1.6 million metric tons in May due to seasonal patterns, trade tensions, and tariff increases. Some of the U.S. soybeans might have arrived in April and cleared lengthy customs inspections during May.

China customs data; transgenic soybeans.

China customs data; transgenic soybeans.

China's cotton imports totaled 276,888 metric tons in May, down more than a million metric tons from 1.315 million metric tons in May 2024. China's cotton import from both Brazil and the U.S. were down sharply.

China's grain imports were sharply lower than year-earlier volumes, as they have been each month in 2025. The cumulative total of cereal grain imports for January-May 2025 is 10.15 million metric tons, down 66.6 percent from the same period last year. Corn imports so far this year are down 94 percent, and wheat imports are down 80 percent from the same period last year.

In May 2025, China imported 188,540 metric tons of corn, down from 990,000 metric tons from May last year. China's imports of Ukrainian corn were down $166 million (706,633 metric tons), while imports of U.S. corn were down $40 million (down 161,816 metric tons), and imports of Brazilian corn were down $7.6 million (down 28,814 metric tons). There were small year-on-year increases in China's purchases of corn from Russia, Kazakhstan, and Myanmar.

May 2025 imports of wheat reached 545,000 metric tons, down from 1.84 million metric tons a year ago. China reduced its imports of wheat from all its trading partners. Imports from the U.S. were down 361,000 metric tons from a year ago, and imports from France were down 617,773 metric tons. China had smaller decreases in wheat purchases from Canada, Australia, and Kazakhstan. 

China's May imports of sorghum were 379,000 metric tons, down from 671,000 metric tons a year ago. China slashed May purchases of U.S. sorghum by 526,157 metric tons from last year, partially offset by increases in sorghum purchases from Australia (up 231,2250 metric tons) and from Argentina (up 2,938 metric tons).

May poultry imports were down 25 percent by volume year-on-year and beef imports were down 17 percent, but pork imports were up 11.7 percent year-on-year.

China's May imports of U.S. beef were down $65.3 million from a year earlier, and imports of beef from Argentina were down $95.4 million. Its beef imports from Australia were up $63.3 million and beef imports from Brazil were up $16.1 million from year-earlier volumes. Imports of Uruguayan beef were down $10 million.

China's May imports of U.S. pork and offal were down $20.4 million from a year earlier. Pork imports from Brazil were also down $15.9 million, but pork and offal imports from Spain were up $29.5 million.

China's soybean meal percentage of feed is meaningless

Chinese officials have been pushing feed mills and livestock farmers to reduce their use of soybean meal in animal feed for more than 5 years. They like to point to percentages of soybean meal and corn in manufactured feed reported by the quasi-government China Feed Industry Association (CFIA) as evidence of progress on this campaign. However, these percentages have no correspondence to soybean imports and are essentially meaningless. 

CFIA has included the percentages of soybean meal and corn in animal feed in its reports of monthly feed production since 2021. CFIA occasionally skips a month, never issues a December report, and occasionally omits the percentages. Agricultural officials occasionally cherry-pick percentages from these reports to demonstrate the success of their programs to cut soybean meal use.

The percentage of soybean meal compiled from monthly CFIA reports from 2022 to 2025 in the chart below shows no obvious trend in the percentage. High values of 15.6 were reported during several months of 2022, and low values of 12.1 percent were reported in April-May 2025. But values of 12.5 and 12.7 were also reported in other months of 2022, and values of 13.3 percent were reported in January-February 2025. 

The percentage of soybean meal is remarkably stable in comparison with the percentage of corn used in feed, which is higher and fluctuates more than the soybean meal percentage. The corn percentage ranged from as low as 22.8 percent in July 2023 to over 47 percent in 2025. The corn percentage appears to have a seasonal pattern. Low values during summer months likely correspond to an increase in seasonal supply of wheat and wheat bran that can substitute for corn in northern regions of China, while the peak during January corresponds to the seasonal availability of corn. 

Compiled from China Feed Industry Association reports.

The soymeal and corn percentages add up to 40%-to-50% most months. CFIA never reports what makes up the other 50%-to-60% of feed ingredients: sorghum, barley, wheat, distillers grains, cassava, whey, fish meal, other protein sources, etc. Substitution of wheat for corn could reduce the need for soybean meal to some degree since wheat's protein content is higher than corn's.

Chinese officials say the reduction in soybean meal use will result in a big drop in soybean imports. That did not happen in 2024 when CFIA reported that use of soymeal decreased by 2.4 million metric tons (mmt), yet customs data showed that imports of soybeans increased by 7.2 mmt during the calendar year. 

The lack of correspondence between CFIA data and soybean imports can be demonstrated with monthly data. CFIA never reports the actual amount of soy used, but the implied amount can be calculated by multiplying the reported percentage of soymeal used in feed by the volume of feed produced (excluding additives which have no soymeal). The chart below shows this monthly volume charted against the potential supply of soymeal calculated as 70% of monthly soybean imports. 

Again, there is no declining trend in soymeal consumption based on the CFIA data. Use of soymeal implied by the CFIA data is low and fluctuates very little from month to month compared with supplies implied by imports. During 2023 and 2024 the potential supply of soymeal far exceeded the amount used in feed implied by the CFIA data. The flat use of soybean meal implied by the CFIA data would not have predicted the increase in soybean imports in 2024. CFIA data imply flat use of soymeal in 2025 so far, but imports were unusually low during January-April before exploding to record-high in May 2025.  

Soybean meal use calculated from China Feed Industry Association data.
Soybean meal supply is 70% of monthly soybean imports (HS 12019019).

The conclusion is that the Feed Industry Association's percentages are not useful as an indicator of China's demand for imported soybeans. 

Soybeans have staying power in China because they are the cheapest and most abundant source of both protein for feed and edible oil in China. Soybean meal and oil will retain its dominance as long as the products are cheap and cost-effective. It's true that China's growth in soybean consumption will not continue on its past path of relentless growth. But be skeptical when you hear Chinese officials citing their data about percentage of soybean meal in feed as a portent of declining soybean imports.

Policy Bank Ups Funding for Summer Grain Procurement

In another sign that Chinese officials are eager to keep farmers happy during a year of low crop prices, the Agricultural Development Bank of China (ADBC) pledged to increase financing for purchase of summer grains. ADBC allocated 150 billion yuan (over $20 billion) to fund purchase of this year's winter wheat, rapeseed, and the early-season rice crop, an increase of 40 billion yuan (about $5.5 billion) from last year. The announcement was made at the ADBC's June 13 meeting to launch financing of summer grain procurement.

The ADBC is the Chinese government's rural policy bank that finances procurement of commodities for government reserves and other rural policies, viewed as a backstop to stabilize markets. The bank's most recent public report for 2023 said ADBC financed more than half of grain that year with funds totaling 323.7 billion yuan issued by the bank. The 2023 report also showed a 70-percent increase in nonperforming loans that year. As of June 2025 the ADBC has not issued an annual report for 2024. Yesterday, the ADBC issued 14 billion yuan (nearly $2 billion) in bonds to fund its operations. 

The increase in the bank's credit funding is meant to prop up markets for summer-harvested crops. China's wheat and early-rice procurement prices in the first week of June are down about 4 percent from a year ago and the average rapeseed price is down 2 percent from a year ago, based on prices reported by China's National Food and Commodity Reserves Administration. 

Earlier this month China's grain reserve corporation announced procurement of wheat at minimum prices in Henan Province. ADBC funds will finance these purchases. Early rice procurement at minimum price is also possible this summer (the average price is currently close to the minimum set for 2025), but rapeseed is not covered by a minimum price program. Chinese authorities maintain reserves of early rice, wheat, and rapeseed oil that are rotated year by year. 

The ADBC's meeting held in Nanjing included the headquarters deputy director and officials from branches in summer grain-producing provinces. Officials were told that they must take the initiative in credit for summer grain purchases to ensure that farmers can sell their grain smoothly and to ensure market stability. The priority is to ensure funding for replenishing grain reserves and buying grain at minimum prices without cutting into private sector grain procurement. Officials said they would work with local authorities to address the problem of substandard grain procurement. 

China Wheat Prices Sinking Despite Drought Impact on New Crop

China's wheat crop was hit by drought this year, but authorities are nevertheless scrambling to prop up sinking wheat prices. Several years ago, Chinese officials made farmers tear up fruit trees and cash crops so more food grains could be planted. Now farmers are seeing low yields and bad prices for the wheat officials forced them to plant.

As reported here last month, there have been reports of sustained drought conditions in parts of China's wheat belt. During an inspection of the wheat harvest in Henan Province last week China's Minister of Agriculture and Rural Affairs Han Jun acknowledged that parts of the largest wheat-producing province had experienced sustained drought, but he insisted that efforts to ramp up irrigation had reduced damage to the crop. Most of the article recounted Han's urging of officials and farmers to boost wheat yields and improve disaster prevention efforts.

A report by futures market analysts gave an evaluation of the new wheat crop that government officials fail to provide. They concluded that wheat yield this year declined between 4% to 15% in most districts of Henan and Shandong, China's two largest wheat-producing provinces. The most serious declines were in western and northern parts of Henan, especially in hilly and mountainous areas where irrigation was not feasible. The regional breakdown was consistent with earlier reports of serious drought. Artificial rainfall added moisture in a few areas, but wheat stalks became prone to lodging. On the other hand, many districts in Shandong and the Xinxiang district of Henan had steady or slightly higher yields this year. 

Wheat analysts interviewed by 21st Century Business Herald gave similar reports of poor wheat yields in southern parts of Henan and mountainous areas where irrigation was lacking. Analysts said wheat that was harvested had good quality as measured by test weights, high gluten, and low vomitoxin.

The decline in wheat yields did not reduce China's crop enough to prevent wheat prices from falling. The National Bureau of Statistics producer price index for wheat in Q1 2025 was down 3.7% from a year earlier. Average wheat procurement prices posted by China's Food and Commodity Reserve Administration in the first week of June are 2%-to-4% lower than a year ago in provinces of the major wheat production belt. The decline is steeper in western provinces Sichuan, Gansu, and Xinjiang.

An analyst told 21st Century Business Herald that wheat prices are under downward pressure due to weak downstream demand from flour and feed mills who are cautious in purchasing wheat. The average wholesale price for flour reported by the Food and Commodity Reserves Administration is down 10.6 percent from a year ago.

Wholesale prices reported by Administration of Food and Commodity Reserves.

On June 6, officials announced the launch of market intervention purchases of wheat in Henan Province at the minimum price level of RMB 2380 per metric ton. This is the first time the minimum price purchase program has been activated since 2020. 21st Century Business Herald said the decision to launch the intervention in Henan was due to prices falling below farmers' "psychological defense level."

Procurement prices reported by Administration of Food and Commodity Reserves.
Minimum price for wheat set annually by National Development and Reform Commission.

Economic Daily commentator Liu Hui emphasized measures authorities are taking to make it easier for farmers to sell their wheat. In addition to launching the minimum price procurement, Li cited this year's purchases of new wheat to "rotate" grain reserves, an increased number of purchasing points and offering of rest areas, cups of tea and heatstroke prevention medication at grain purchasing warehouses as measures to facilitate farmers' grain sales in the summer heat. Over the past two decades officials have often trumpeted measures to make grain sales more convenient. They fear a repeat of rural dissatisfaction that threatened to boil over in the late 1990s when government grain stations refused to buy grain, downgrading it, or by issuing IOUs as payment. 

The futures analysts' report estimated that area planted in wheat was steady this year. They noted that wheat area had expanded in 2023 and 2024 after officials used aggressive tactics to force farmers to convert land from fruit orchards and cash crops to grain fields. ...Are some of those farmers now annoyed that they are losing money on wheat they were forced to grow? 

Market analysts are also watching a convergence between sinking wheat prices and rising corn prices. Putting a floor under wheat prices may prevent corn and wheat prices from reaching parity, an event that might encourage even more use of wheat in animal feed.