BEIJING (Dow Jones)--China's corn prices in major producing areas were higher
in the week to Wednesday, as market participants competed for dwindling supply.

  Corn prices in Baicheng in Jilin province, the biggest producer, were around
CNY1,520 a metric ton, up CNY20 from a week earlier.

  Corn prices in Harbin in Heilongjiang province were between CNY1,100 and
CNY1,160/ton, up CNY20-CNY40/ton.

  The government is on track to buy a total of 40 million tons of corn from
major producing areas since October, almost one-quarter of the 165.5 million
tons harvested last year. So far it has bought 70% of its planned purchases.

  The purchases, which will be completed by the end of next month, have pushed
domestic corn prices higher.

  Stocks at big state-owned corn traders are only one-third of levels in the
same period last year, as the government controls most of the crop, said a
manager at one of the traders.

  Industrial processing plants in Jilin province have increased purchase prices
to attract volume, but farmers have been reluctant to sell due to limited stock
on hand, said Jilin Provincial Grain Administration.

  Meanwhile, feedmeal companies need to replenish their stocks, so they are
helping to push prices higher.

  Corn prices in big consumption areas also rose under pressure from higher
prices in producing areas, and it's increasingly difficult to purchase corn as
farmers stay on the sidelines in anticipation of higher prices.

  Corn prices at Guangdong port were between CNY1,660-CNY1,670/ton, up
CNY20-CNY30/ton from a week ago.

  Analysts expect corn prices to rise slightly higher in the near term on
reduced supply and higher starch prices, but the upside is limited by sluggish
feedmeal demand, and government transfers of corn from producing areas to
consumption areas will help to pressure corn prices there.

  The government has arranged for the transfer of 3 million tons of corn from
the north to southern consumption areas, and will transfer more subject to
demand.


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