U.S. corn futures are expected to start lower Thursday after the government increased its outlook for global supplies of the grain, fueling concerns that high prices are slowing demand.

Traders predict corn for May delivery, the most-active contract, will start 8 to 10 cents a bushel lower at the Chicago Board of Trade. In overnight electronic trading, the contract fell 8 3/4 cents, or 1.2%, to $6.92 1/4 a bushel.

The U.S. Department of Agriculture's monthly crop report should weigh on futures in early trading as it increased the outlook for end-of-season global supplies by 0.5% from February, traders said. The government left its estimate for tight U.S. inventories unchanged.

"When the world balance table starts to loosen up, the market probably does too," said Don Roose, president of U.S. Commodities, a brokerage firm in Iowa.

Corn futures have already pulled back 6.5% from a 32-month high Friday as rallying crude oil prices have raised fears a potential global economic slowdown could dent demand for agricultural commodities. Futures had been climbing on strong demand for corn and concerns farmers will not plant enough this spring to replenish tight supplies.

Expanding global grain supplies indicate high prices have helped curb demand, analysts said. The USDA also raised its forecasts for world wheat and soybean inventories following rallies to 2 1/2-year highs in those markets.

"The world numbers are a bit negative across the board," Roose said. "That probably is taking the charge here and says at these kinds of prices, you do change the supply and demand."

Karl Setzer, analyst for MaxYield Cooperative in Iowa, said it was "quite possible" the USDA may have issued its highest use and lowest supply estimates for the rest of the marketing year, which ends Aug. 31. End-of-season U.S. corn supplies are still projected at a 15-year low, which "should prevent a price collapse from happening," he said.

"This report gives us the indication price rationing is working," Setzer said.

U.S. corn export sales data, issued in a separate report Thursday from USDA, showed a slowdown in demand. Net sales of 477,200 metric tons for delivery in the current marketing year were down 56% from the previous week and 60% from the prior four-week average.

Yet, futures could find support from buying by domestic users of corn, who are still nervous about precariously low supplies. The drop below $7 a bushel in the most-active May contract looks like a good buying opportunity, traders said.