U.S. news media are reporting that China's soybean boycott is driving American farmers into financial trouble, but China could have a farm crisis of its own brewing. Chinese authorities quietly pared back imports of corn and wheat last year to insulate its farmers from worldwide downward pressure on farm prices. But the country's flood of imported Brazilian soybeans this year pressures prices of Chinese soybeans, with knock-on effects on prices of other crops.
Several years ago Chinese authorities fretted about low profits undermining grain production incentives. Since then, farm prices have fallen further and the country's new cadre of scaled-up farms have a bloated cost structure. Now Chinese authorities have stopped publicly talking about the problem, likely an indicator that the problem has become even more acute.
As China's fall harvest gets underway crop prices are low and under a new round of downward pressure. The average price for corn--China's largest crop--reported Sept 23 by China's Food and Commodity Reserves Administration was RMB 2,235 per metric ton, close to last year's price, but down 20% from September 2023. Chinese corn prices have fallen after harvest during October-December during the last two years and could do so again as new crops come on the market. During September there was a slight downward trend that signals another seasonal decline as the harvest gains momentum.
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| Data from China National Administration of Grain and Commodity Reserves. |
Prospects for price declines on the horizon are evident from corn futures. The November 2025 corn futures contract on China's Dalian Commodity Exchange peaked in the first week of September at RMB 2231 per metric ton and dropped about 4 percent to RMB 2143 by the end of September. That's below the September contract that closed out at RMB 2,285 last month. These prices suggest lower corn prices are indeed expected over the next two months
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| Chart shows daily high, low and closing prices on the Dalian Commodity Exchange. |
A corn market analysis by China's Feed Information Net this week reported a 2.57% decline in the cash price during September as new corn came on the market and accumulated at northeastern ports for shipment to the south, traders began selling inventories of old grain more freely, and poor profitability constrains feed mill purchases. A major uncertainty is impact of wet weather across northern China that hindered drying down of corn and resulted in mold in some areas.
China's soybean producers are also facing lower prices than last year. While Chinese corn prices rebounded in H1 2025, there was not much of a rebound in soybean prices. The late September farm price for China's soybeans was down about 11.4% from a year ago and down 23% from two years ago. There was a slight downward trend during September, also suggesting further declines as the harvest progresses this fall.
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| Data from China National Administration of Grain and Commodity Reserves. |
The November No. 1 soybean contract on the Dalian exchange peaked on September 8 at RMB 3,977 and was down about 1.3% by the end of the month. The November soybean futures price is about 3.4% below where the September price ended up, suggesting more declines are expected.
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| Chart shows daily high, low and closing prices on the Dalian Commodity Exchange. |
Chinese rice prices, both indica (long grain) and japonica (medium grain), also show signs of decline heading into fall harvest. It looks likely that authorities will activate minimum price purchase programs for rice as prices approach the support price level of RMB 2580 for indica and RMB 2620 for japonica. Rice prices saw sharp declines in October last year that contrasted with the unusual October-November increases during 2023.
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| Data from China National Administration of Grain and Commodity Reserves. |
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| Data from China National Administration of Grain and Commodity Reserves. |
China's official cost of production survey in 2023 (the most recent data) showed Chinese corn and single-season rice producers making profits, wheat producers close to breakeven, and producers of soybeans, rapeseed, and double-cropped rice losing money. The decline in crop prices since then (evident in the charts above) likely eroded profitability for Chinese farmers. Lack of profits is often cited obliquely in government discussions as a challenge for maintaining national food security. Shrinking profitability likely contributed urgency to the agriculture ministry's campaign to raise crop yields based on the idea that higher yields will reduce per-ton production costs and improve profitability for farmers.
The official cost survey understates the cost structure for "new type" scaled-up farm operators who replace unpaid family labor with higher cash expenses for machinery and fuel, buy expensive high-yielding seeds, and pay cash rent for their land. While the cost survey includes land rental of about RMB 200 to 400 per mu, a China Agriculture University article reported rents ranging from RMB 400 to 800 per mu in various regions for grain crops (land used for vegetables and bananas brings higher rents).
| Since the elimination of agricultural taxes 20 yeas ago, China's small-scale farmers have paid nothing for the land allocated to them by their village collective if they cultivate it themselves. Now authorities are pushing schemes to consolidate and transfer village land to scaled-up farms that include payouts to villagers to keep them happy after giving up their land. These payouts become a cash expense for the farming operations that take over the land. |
The rapid expansion of scaled-up farmers who pay villagers for their farmland means that land rents are undermining the economic viability of grain production in China. The 2022 China Agriculture University article cited above observed that land rent accounted for half of grain production costs for scaled-up farms. That 2022 article noted that land rents raised the cost of wheat above the price of imported wheat, and its authors warned that a 10% drop in grain prices would wipe out profits for scaled-up grain farmers. Unprofitable grain ignited panic in authorities about the diversion of land away from grain production, prompting them to hire teams of rural thugs to force farmers to plant grain crops, knock down buildings and uproot fruit trees to maximize land area planted in grains.
Since 2023 the teams of rural thugs have quietly disappeared, but Chinese wheat, corn and soybean prices have dropped by 20%, while rice prices have dropped 5%-to-10%. The scaling-up of farms and encouragement to adopt expensive machines and "smart-farming" equipment continues. A 2024 21st Century Business Herald article reported rapid growth in farmland transfers by various methods and estimated that about half of China's cropland was leased to large-scale farmers last year.
Discussion of the role of land rents in China's grain production has disappeared from news media and academia during the last 3 years. The absence of discussion in state-controlled media is probably an indicator that it is a worrying problem that authorities want to cover up.
China's establishment of a commodity pipeline with Brazil appears quite successful by facilitating China's trade war boycott of U.S. commodities. However, the China-Brazil hookup may prove to be more fragile than expected if Chinese authorities panic over low crop prices and notice that relentless expansion of output and exports from South America boosts world supplies and puts downward pressure on prices. In particular, China's quest to boost domestic soybean production--cited by the ag ministry as a major achievement during the 14th 5-year plan--looks doomed as Chinese soybean prices drop faster than any other crop price, further eroding production incentives.
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