Domestic wheat auctions under China’s minimum purchase price program have been booming in recent months, signalling robust demand in a tightening supply environment and reinforcing bullish sentiment, as the trade reportedly holds back sales amid consumer stockpiling.
As of March 18, a total of 2.804 million metric tonnes have been offered at auctions year-to-date, with 2.228 million tonnes being sold. This reflects an average clearance rate of 79.5 per cent at an average sale price of Yuan 2,370.96 per metric tonne (US$343.49/MT)
However, at the most recent auction on March 18, a total of 501,300 metric tons of wheat was offered from storage facilities in Gansu, Jiangsu, Henan, Anhui, Hubei, and Hebei, with a 100 per cent clearance rate. The average price was reported at Yuan 2,441/MT (US$353.64/MT), with a high of Yuan 2,550/MT (US$369.43/MT) and a low of Yuan 2,360/MT (US$341.91/MT).
With eligibility extended to include flour millers, feed producers, and traders, the auction witnessed a convergence of demand for both stockfeed and milling wheat, with bidding reported as extremely competitive. The clearance rate highlights the tightening grain supply situation in China at the moment and a strong desire among participants to secure supplies.
Although the vintage of the wheat was not quoted, it is believed that offerings in the latest auction consisted primarily of old-season stocks. In the eight auctions of minimum support price wheat held from January 7 to March 4, a total of 2.0MMT was offered to the market, with sales of 1.4MMT. Stocks from the 2017 harvest accounted for 1.6MMT, or 80 per cent of the stocks on offer, with 1.3MMT sold.
This means that 92.8 per cent of the wheat sold over the eight-week period was harvested almost 9 years ago, suggesting most will be destined for the stockfeed sector, as quality is unlikely to meet milling requirements. At the end of 2025, China still held 8.7MMT of wheat harvested in 2017, leaving 7.4MMT yet to hit the stockfeed market.
Full clearance at the past two wheat auctions, the escalating domestic demand profile, and structural market tightness have flowed through to the spot market, with regional prices firming in recent weeks. This is believed to have prompted the government to increase the total offering at the next auction to 800,000MT.
According to the USDA’s Foreign Agricultural Service, China’s wheat production will remain stable in 2026/27 at 140.1MMT, despite the late planting. The latest planting survey reveals that the nation’s all wheat area is unchanged at 23.58 million hectares in the current season. Persistent precipitation in the autumn delayed planting by an average of 15 days, with the campaign in some regions more than a month behind the long-term average.
Poor seedling establishment and growth immediately post-sowing in the affected areas led to a 40 per cent increase in the proportion of weaker seedlings as China entered the colder winter months. However, favourable weather conditions through winter and early spring, combined with adequate root-zone moisture reserves, have consolidated plant health, with the crop in better condition than initially expected as the warmer spring weather arrives.
Wheat consumption in 2026/27 is forecast to remain at the 2025/26 level of 150MMT. Demand from the food sector dominates the balance sheet at 117.0MMT. However, a shrinking labour force and an aging population have pushed wheat flour purchases lower in each of the past three years. Additionally, changing diets and a shift toward convenience foods at the expense of home cooking have reduced household use of flour.
China’s feed grain demand in the 2026/27 marketing year (July to June) will increase slightly on the back of stable swine output and rising poultry production. The Beijing bureau of the FAS forecasts feed and residual use of major grains to total 290.7MMT, 1.2MMT higher than current-season consumption.
Corn remains the dominant feed grain at 241.0MMT, followed by wheat at 33.0MMT, barley at 8.7MMT, and sorghum at 8.0MMT. The wheat component is unchanged year-on-year, with high toxin levels in corn and Beijing’s intention to liquidate old wheat reserves holding stockfeed inclusion rates elevated.
On the basis of stable domestic production, FAS currently expects China’s wheat imports in the 2026/27 marketing year to remain stable year-on-year at around 6.0MMT, but 1.8MMT higher than the 2024/25 season. This is significantly lower than the tariff rate quota of 9.64MMT announced by Beijing in October last year and unchanged from recent years. While storage space is at a premium leading up to the 2026 harvest, accelerating old-crop wheat auctions may create additional import capacity at the back end of the 2026/27 marketing year.
Wheat stocks at the end of the current marketing year are expected to sit at around 122.8MT, including grain from many seasons held under the government’s minimum purchase price policy. With the sell-down of the oldest of state reserves, FAS estimates that carry-out stocks by the end of the 2026/27 season will fall by 4.9MMT to 117.9MMT.
Shipments of Australian wheat to China since October 1, 2025, amount to 590,000 metric tonne, a 331 per cent increase compared to the 178,000 metric tonne loaded out in the previous corresponding period. However, those numbers are both dwarfed by the 1.59MMT exported to the Asian powerhouse from October 2023 to January 2024.
Australia now faces new competition into the Chinese market in the form of Argentina, the southern hemisphere’s only other major wheat producer and exporter. China formally approved Argentina’s market access in January 2024, but it has taken almost two years for the program to kick off.
The first commercial shipment of Argentine wheat to China since 1997 departed the port of Timbúes on Argentina’s Paraná River in December 2025, with a 70,000 metric tonne payload. After almost two months on the water, it arrived at the Chiwan Port Terminal in Shenzhen on February 10, with domestic flour mills the ultimate destination.
Call your local Grain Brokers Australia representative on 1300 946 544 to discuss your grain marketing needs.
Written by Peter McMeekin.
