The U.N. Food and Agriculture Organization in Rome blamed the drought on substantially below-normal rainfall since October 2010, which threatens the winter harvest in June.
The affected regions include Shandong, Jiangsu, Henan, Hebei and Shanxi provinces, which together account for 60 percent of the area planted and two-thirds of the national wheat output.
The report cited official Chinese estimates that the drought has affected 12.75 million acres out of the 34.5 million acres under winter wheat in these provinces. The drought, which has also created a drinking-water shortage, has affected 2.57 million people and 2.79 million livestock.
The report said the recent relatively mild temperatures and supplementary irrigation would help the situation but warned any extreme cold temperatures "could still devastate yields."
The report said wheat prices already have been rising rapidly in recent months in China, with January wheat flour prices up 16 percent year-on-year.
This month the FAO said world food prices rose for the seventh month in a row in January, warning the trend may continue.
"High food prices are of major concern especially for low-income food deficit countries that may face problems in financing food imports and for poor households which spend a large share of their income on food," said FAO economist Abdolreza Abbassian.