China sees rising wheat auction clearance rates amid strong demand

In China, domestic wheat auctions under the minimum purchase price program have recorded significantly higher clearance rates, reflecting strong demand in an increasingly tight supply environment. Market participants report that traders are holding back sales while end-users continue to build up stocks, supporting bullish sentiment.

As of March 18, a total of 2.804 million tonnes of wheat had been offered at auctions this year, with 2.228 million tonnes sold, resulting in an average clearance rate of 79.5% at around Yuan 2,371 per tonne ($343/t). At the most recent auction, all 501,300 tonnes on offer were sold, with the average price rising to Yuan 2,441 per tonne.

The expansion of eligibility to include flour millers, feed producers, and traders has intensified competition at auctions. This reflects tightening supply conditions and a strong willingness among buyers to secure wheat for both food and feed use.

A large share of the wheat sold comes from older stocks, particularly from the 2017 harvest, which accounted for up to 80% of supply in some auctions. Due to lower quality, much of this wheat is likely destined for the feed sector, though its sale helps the government gradually reduce state reserves.

Amid these developments, domestic wheat prices have been firming, and authorities are expected to increase the volume offered at upcoming auctions to 800,000 tonnes. Despite a stable production outlook of over 140 million tonnes for the 2026/27 season, the market remains tight due to structural demand factors, weather-related challenges, and ongoing efforts to rebalance state stockpiles.