U.S. corn futures ended higher Monday, rebounding from early losses on strong demand.

Front-month corn posted its highest close since July 3, 2008. Corn for March delivery at the Chicago Board of Trade climbed 10 1/2 cents, or 1.5%, to $7.22 1/2 per bushel.

After slumping through most of last week, the market demonstrated the past two days that buyers are emerging on breaks in prices, analysts said. End-users looking to secure supplies and speculators confident the market still have upside have supported the market, they said.

The nearby contract gained on deferred months, analysts noted. December corn, which reflects the crop to be planted this spring, ended up 5 cents at $6.06 3/4, well behind the March contract.

"With the bull spread working, it shows that this is still a demand-driven market," said Jason Roose, analyst with U.S. Commodities in Des Moines, Iowa.

Roose added that continued uncertainty about damage to Mexico's crop was also supportive.

Meanwhile, corn prices continue to gain versus soybeans, which Jerry Gidel, analyst at North America Risk Management Services, said could lead to increased corn acreage and less soybean acreage this spring in the U.S.

The corn market has also narrowed its spread with wheat to levels that could encourage more livestock producers to use wheat for feed instead of corn, analysts said.

Traders are still digesting the U.S. Department of Agriculture's projections from its annual Ag Outlook Forum. The USDA reaffirmed a projection that acreage would climb to 92 million from 88.2 million in 2010.

U.S. farmers will struggle to meet the USDA's optimistic outlook for 2011 plantings, said Morgan Stanley, which sees continued upside for prices. It said in a note to clients that total projected acreage for corn, wheat and soy would be the highest since 1984, and questioned whether there's enough land to make that leap.

"We remain constructive across the space, particularly at these [price] levels," the firm said.

Gidel added that it will be at least a couple of months, but likely longer, before traders have any confidence that a strong U.S. crop is on the way this year to ease some of the pressure on supplies.