BEIJING (Dow Jones)--China's corn prices in major producing areas were higher
in the week to Wednesday on rising concerns over a decline in output due to the
ongoing drought.

  Corn prices in Harbin in the northeastern major producing province of
Heilongjiang were around CNY1,580 a metric ton, up from CNY1,550/ton a week
ago.

  Prices in Changchun in the northeastern province of Jilin were around
CNY1,610/ton, compared with CNY1,540-CNY1,600/ton a week earlier.

  The drought in the northeast could cause an output decline of around 15
million tons, tightening supply this year, although the government's reserves
of 30 million tons may curb any price surge, said an analyst with a state-owned
grain trader who had just returned from a field trip to the major producing
Jilin and Liaoning provinces.

  China's corn output last year was estimated at 165.9 million tons, up 8.9% on
year, according to data from China National Grain and Oils Information Center.

  Drought concerns pushed local corn prices to levels higher than the prices at
the government's weekly auctions, boosting sales volumes to the highest levels
since such auctions kicked off July 21.

  The government sold 1.92 million metric tons of corn during its weekly
auctions Tuesday, 77% of the 2.5 million tons it planned to sell.

  The prices in the eastern producing areas were also higher as feedmeal
processors and breeders hiked their bidding prices on rising demand.

  Feedmeal demand usually picks up ahead of the coming National Day holiday and
the mid-autumn festival in October as plants replenish stocks.

  Corn prices are likely to stay high although the harvest season is nearing,
as the government's regular sales at high prices have set the tone for new corn
prices, said analysts.


  -Zheng Xiaolu contributed to this story, Dow Jones Newswires; 8610 6588-5848;
tracy.zheng@dowjones.com