CHICAGO (Dow Jones)--U.S. corn futures are expected to start higher Tuesday as fresh export sales raise expectations that the government will tighten its supply outlook in a crop report.

Traders predict corn for March delivery, the most-active contract, will open 3 to 6 cents a bushel stronger at the Chicago Board of Trade. In overnight electronic trading, the contract advanced 5 cents, or 0.8%, to $6.12 a bushel.

Leading prices higher are projections the U.S. Department of Agriculture, in a crop report due Wednesday at 8:30 a.m. EST, will reduce global supply estimates due to poor weather and strong demand. Traders are positioning themselves in front of the report following a 5.4% slide last week.

Participants are "justified in adding back a portion of risk premium jettisoned last week" due to supply concerns, said Rich Feltes, vice president of research for brokerage firm R.J. O'Brien. The market gained back some of the losses Monday with a 2% rally fueled by concerns about drought threatening output in Argentina, the world's second largest corn exporter, and by talk of increased demand.

The USDA on Tuesday confirmed that private U.S. exporters had struck deals to sell 116,000 metric tons of corn for delivery to unknown destinations and 125,000 metric tons to Mexico. Traders had said there was talk China was in the market for corn Monday. The U.S. is the leading corn exporter.

Strong demand may prompt the U.S. government to cut its estimate for supplies at the end of the crop's marketing year on Aug. 31. Analysts, surveyed by Dow Jones Newswires, on average expect the USDA to project ending stocks at 778 million bushels, down from a December estimate of 832 million and well below the prior year's total of 1.708 million.

"The corn situation in the U.S. is tight, and we are seeing few signs of demand for corn being choked off," according to Iowa-based Summit Commodity Brokerage.

Weather conditions remain threatening in Argentina, where "a deficit of rainfall will continue throughout most of the major corn and soybean areas during the next seven days," according to Telvent DTN, a private weather firm. Dryness, combined with periods of near- to above-normal temperatures, will continue to stress crop, the firm said.

-By Tom Polansek, Dow Jones Newswires; 312-341-5780;