Chinese wheat prices have been falling since the harvest began in May. In Henan Province 262 districts have launched procurement at minimum prices to stop the slide in market prices. The support price program has also been launched in Anhui Province (91 districts), Hebei (46 districts), Jiangsu (14 districts), and Shandong (4 districts), with 6 million metric tons procured. Last year 16.4 mmt of wheat was procured at minimum prices.
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| China Administration of Food and Commodity Reserves. |
Flour prices have also been declining since June, suggesting weak downstream demand.
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| Wholesale prices from China Administration of Food and Commodity Reserves. |
Chinese corn prices have also been falling since May, in part because declining wheat prices have prompted feed mills to substitute wheat for corn. Availability of other substitutes and idling of some corn processing plants due to weak downstream demand also had a depressive effect on corn prices.
Some corn market commentators speculate that the corn market may have bottomed out because the wheat price support may prevent wheat prices from falling even lower and bolster corn prices. The average corn price was RMB 2237 per ton (about $8.77 per bu) during the week ended August 11, while the average wheat price was RMB 2380. (note: China has had no formal support price program for corn since the "temporary reserve" program was eliminated 10 years ago, but the reserve company still buys up corn to prevent prices from falling)
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| China Administration of Food and Commodity Reserves. |
A Mysteel commentary pointed out that the large amount of off-grade and sprouted wheat that can only be used as feed this year is driving down the corn price, and this low-grade wheat is not eligible for the minimum price purchase program. On the other hand, higher-grade wheat is relatively scarce this year, and its price is still relatively high.
Historically, corn prices in China tend to have a seasonal pattern--they decline in the Fall months after harvest and rise during the Summer months after farmers have sold all their corn. The price premium of wheat over corn also varies seasonally. The wheat premium tends to be high during the Fall and Winter and low during the Summer. The percentage of corn used in feed follows a seasonal cycle consistent with the price premiums--high percentage in the Winter, low percentage in the Summer.
The chart below indicates that this Summer's wheat price premium is not unusually low. The June 2026 percentage of corn in feed was 33.8%, the highest since 2022. Mysteel may be correct that the increased volume of off-grade wheat is what's causing this year's increase in wheat substitution for corn in feed.
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| China Administration of Food and Commodity Reserves. |
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| China Feed Industry Association (no data for December). |
With corn prices already weak in August, China could see more downward pressure in coming months as the new corn harvest comes on the market. The first Spring corn has already begun to hit the market this month. This year's corn area increased according to Spring surveys. Some fields have been flooded by the most recent round of typhoons, but one analyst said there is little impact on overall yield so far. If corn prices do fall, seasonal wheat feed use will fade in the Fall months as it normally does.
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