China has a drought going in it's main what production areas amounting to 2-3 million hectares in the north. This has been an ongoing problem for the last half dozen years or so, so it isn't an indication that things can't turn around as before. However, statements indicate that production is going to suffer in some areas because the wheat hasn't developed normally.
The point is, one time or another these winter dry spells will extend into spring and summer and there will be extensive production problems. If that happens it will demonstrate why China insists on maintaining a year's supply of wheat. Some say it's too innefficient and costly to maintain these reserves. '07-08 put a pretty big dent in the idea that industrial 'just in time delivery' can be applied to grain commodities because of the inherent and uncontrollable 'Normal Production Variation' that is neither predictable (check out Australia today) or accounted for by something like futures trade, which IMO is one of its biggest failings.
China has decided that whatever the 'innefficiency' of large grain stores it would prevent costly damages to a social order that is famously insecure about food supples. And perhaps mitigate the damage to the global well being if it had to compete for large supplies with other societies that are more at risk and more unstable or risk a backlash for running up prices to procure supplies of food it must have.
