BEIJING (Dow Jones)--Corn prices in China's major producing areas rose in the
week to Wednesday, with tight supply dominating the market as farmers prepare
to harvest a new crop in a couple of months.

  Prices in Shandong province, a key grower, were around CNY1,820 a metric ton,
up CNY80/ton from a week earlier. In the Guangzhou area, they gained about
CNY10/ton to CNY1,810/ton.

  Still, the increase was not dramatic or across-the-board.

  In places such as Jilin province, rates remained mostly unchanged from a week
earlier, at around CNY1,590/ton.

  "Corn supply is fairly low in Shandong and in other corn selling areas," said
Wang Cheng, an analyst with Nanhua Futures.

  With new corn due to be harvested around October, old supplies are dwindling,
Wang said. The new crop is due to hit the market around December.

  Prices are expected to remain stable in the near term, with weekly government
auctions keeping the market on an even keel.

  The government Tuesday sold about half its targeted sale of 2 million tons of
reserve corn.

  "The rising prices have made the government auctions more attractive," Wang
said.

  The government is selling corn at prices ranging from CNY1,490/ton to
CNY1,690/ton, which first boosted spot prices but is now acting as a market
stabilizer.

  Prices continued to edge up this week because of the time lag in moving the
auctioned corn to the market, Wang said.

  While some research houses, including Standard Chartered, believe that
prospects of a severe drought in crop producing areas could prompt more corn
imports, from countries including the U.S., Wang said it's not yet clear if the
drought would badly affect supplies, if at all.

  Wang also said Chinese and U.S. corn are also not regarded as highly
substitutable.