Prices Drop as China Sells Aging Reserves and Demand Cools

China's corn market has flipped from tight to loose. Policymakers have been dumping old grain reserves into the market while simultaneously buying corn in the northeast to prop up prices for farmers in the biggest production region. Meanwhile, weather impacts that don't officially exist have been buffeting the corn market.

Chinese corn prices had bottomed out below RMB 2000 per metric ton in late 2024 before strengthening during the first half of 2025. Chinese corn prices plummeted during the September-October 2025 harvest and soon began rising again after torrential rains ruined a significant portion of the harvest. That event was quickly memory-holed by Chinese censors, but tight supplies boosted corn prices to around RMB 2300 by March 2026. From December through February 2026 spot prices for corn were 9%-to-11% ahead of year-earlier levels. With livestock producers and industrial processors encountering headwinds and corn substitutes flowing into the market, prices began declining in May. 

Chinese futures prices for corn generally trended upward during the first 4 months of 2026, rising about 7.5% from early January to their peak in April. Prices fell during May before recovering moderately in early June. The net decline between the late-April peak and June 18 was about 4%.

Compiled from China's Dalian Commodity Exchange.

Chinese analysts agree that corn substitutes--including aging reserves of imported corn, wheat and rice, as well as wheat from the harvest wrapping up this month--are adding to feed grain supplies, but each analysis provides different numbers that are hard to reconcile.

Since last year Chinese officials have been selling off imported corn (left over from China's Phase One buying binge during 2020-23), with sales from October 2025 to April 2026 totaling about 5 mmt. A China Feed Information Net analysis this week described these sales as filling a supply gap in last Fall's market, alleviating cost pressures on feed mills and industrial users, and "offering a competitive edge in quality characteristics such as moisture content." One analyst this week predicted that sales of imported corn reserves could reach 10 mmt this year. The latest auction of imported corn on June 16 sold all corn offered, but another Feed Information Net analysis interpreted the lower price premium as an indicator that buyers are no longer scrambling to buy corn. 

At the same time, China's reserve corporation, Sinograin, bought up 177,000 metric tons of corn in northeastern provinces last week to prop up prices in that region. 

Sinograin has also been auctioning off old rice reserves. Recently, directed sales of rice not fit for human consumption were made to feed mills to prevent this rice from entering food channels with a price starting at RMB 1,500/mt. The same analyst cited above predicted that the rice sales could displace 8 mmt of corn this year. Unrestricted auctions of rice that is still edible have minimum prices that are too high to justify use by feed mills. 

From January to April 2026 officials held weekly auctions to sell reserves of old wheat that had been purchased to support prices between 2017 and 2020. From March to May 2026, authorities allowed entities other than flour mills to participate, resulting in an estimated 4.4 mmt of old wheat reserves purchased by feed mills during the 2025/26 marketing year. The same analyst cited above thinks 20 mmt of old wheat reserves are still available for release into the market. Wheat auctions have stopped since May when marketing of the new wheat harvest began.

Wheat from China's harvest during May-June also is competing with corn. Officials claim their heroic efforts in orchestrating combines and reviving flattened fields achieved a bumper wheat harvest during heavy rains, and dismissed reports of golf ball-size hail knocking down wheat stalks in early June as "rumors." But all market analysts report that increased supplies of sprouted wheat are being sold to feed mills--estimated at 8-to-10 mmt--adding downward pressure on corn prices.

China's cereal grain imports in the first 5 months of 2025 total 16.4 mmt, up 45% from last year's very low volumes but still low by recent years' standard. Barley imports totaled 6.69 mmt for January-May 2026, sorghum imports totaled 2.69 mmt, wheat imports totaled 2.72 mmt, and corn imports totaled just 880,000 metric tons. Only 60,000 metric tons of corn were imported in May. 

None of the Chinese corn market analyses have mentioned anything about plans to buy American corn. Discussion of reserve sales has not mentioned the possibility that Sinograin is clearing out its reserves of imported corn to make way for new purchases (there was such discussion last December regarding the commitment to buy U.S. soybeans). That doesn't rule out Chinese purchases of American corn to fulfill the May summit's purchase commitment for non-soybean ag products, but there are no signs pointing in that direction so far.

According to Mysteel's January 18 estimate of corn import costs, corn from the U.S. Gulf arriving in China during July-December with the CBOT price at $4.21-$4.49 per bushel was RMB 2362-2487 per metric ton, with the net profit narrowing to under RMB 150 per ton from the previous month. The profit for Pacific Northwest shipments is RMB 190-306 per ton. Mysteel estimated that South American corn is more profitable at RMB 312-366 per ton from Brazil and RMB 440 per ton from Argentina. The U.S. tariff is still 11% versus 1% from South America.