Self-sufficiency in wheat and rice is a pillar of China's food security policy, but officials revealed last week that the country produces 140 million metric tons of wheat and only consumes 65% of it as food. Much of China's wheat is fed to animals or stored in warehouses for as long as 9 years. With surpluses even in years of poor yields, authorities are propping up prices to convince farmers to keep growing surplus wheat.
Last week Chinese propaganda outlets assured farmers that they will get a good price for their wheat as the harvest kicks into gear this month. Official news sites and TV broadcasts reported variations of the same upbeat prediction of a good wheat harvest, stable prices, and ample reserves given at a National Administration of Food and Commodity Reserves news conference on May 14, 2026. Such announcements are common ahead of the grain harvest, but the amount of detail offered and the dozens of outlets broadcasting the "news" suggests that the regime is eager dispel any concerns among farmers and consumers about the state of the wheat market.
One version of the grain administration article led off by assuring farmers that the grain administration has "sent a clear signal" that farmers will be able to sell at a good price, there is plenty of room to store the new wheat crop, and there is plenty of money to pay the farmers. Another version of the article stressed the stability of wheat prices, noting that the average price is higher than last year.
A more obscure news item circulating on May 14 warned of a possible crash in wheat market prices. Authorities may be trying to head off disgruntlement among farmers who have been watching prices fall from over 3200 yuan per metric ton in 2023 to about 2500 yuan going into this year's harvest.
Despite the priority put on wheat and rice crops, Chinese officials rarely provide detailed information on either crop--and never report bad news. In 2025, the wheat crop suffered from drought to the extent that emergency surveys on the status of the wheat crop were conducted and reported to government leaders--but never released to the public. The articles on this year's wheat crop did not mention impacts on yields due to last Fall's heavy rains and flooded fields in the main wheat-growing regions. A grain administration analyst insisted last week that the 2026 wheat crop is growing normally, area planted in wheat is stable (i.e. no fields went unplanted last Fall), and a good wheat supply is assured this year.
The grain administration estimated that wheat production is about 140 million metric tons, while consumption of wheat is about 130 mmt, implying a structural surplus of 10 mmt. An analyst reported that only 65% of the wheat crop is milled into flour. The rest is used as animal feed, for industrial processing or stored in government reserves.
The volume of wheat procured during the peak season from May to September is reportedly 100 mmt. The administration revealed that 16.4 mmt of wheat was purchased for government reserves to prevent prices from falling below the minimum price of 2380 yuan in 2025--more than 16% of wheat procured.
Officials have cleared out 110 mmt of storage capacity for this year's harvest to assure farmers that they will not have trouble selling to grain depots. An administration official claimed that farmers fear being paid with IOUs for their grain or being victimized by "circular trading" schemes. The official emphasized that an "Iron Fist" crackdown has issued penalties to 2,951 corrupt grain marketing officials and settled 180 million yuan in overdue grain payments over 3 years.
A grain official revealed that 6.16 mmt of wheat from reserves had been sold at auctions through April. Auctions of wheat reserves stopped this month to avoid driving down the price when the harvest begins. He did not mention that wheat auctioned last month had been sitting in warehouses for 6 to 9 years. Wheat reserves are supposed to be rotated every 3-to-4 years.
My compilation of wheat procurement prices from the grain administration's web site agrees with their report that wheat prices are about 2,500 yuan per metric ton ($9.40 per bushel) going into this month's harvest. The price fell 13 yuan during the first two weeks of May (a common occurrence at the beginning of the harvest). During the 2025 marketing season, China's wheat price had been just above the minimum price of 2380 yuan ($6.80 per bushel). The price had been higher in May 2024 (2628 yuan), and the price had reached peaks exceeding 3200 yuan in 2023.
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| China State Administration of Food and Commodity Reserves. |
Production cost data issued by China's National Development and Reform Commission shows that net income from producing a metric ton of wheat has been relatively stagnant, averaging 1200 yuan since 2011. Earnings briefly peaked at 1821 yuan in 2022 before falling back below the average during 2023-25. These profit margins look good compared to margins in major wheat-growing areas of North America and Europe, but they are paltry compared to off-farm wages that have grown from 2049 yuan per month in 2011 to over 5,000 yuan per month in 2025. Earnings would be near zero for scaled-up farms that have to pay cash wages for hired labor and rent for leased land.
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| 15 mu = 1 hectare; 6.8 yuan = $1. Cash expense excludes the value of family labor and rent on family contracted land. *2025 is estimated. Source: National Development and Reform Commission. |
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