CHICAGO (Dow Jones)--U.S. corn futures are expected to begin Wednesday's day session sharply higher, buoyed by tight supply outlooks from federal forecasters.

Analysts expect corn to open 10 cents to 20 cents higher.

The U.S. Department of Agriculture January crop updates are supportive and opening calls reflect that bullish attitude. The tight supplies will promote a very strong day for prices as the market has to make sure that it acutely slows demand and raises prices to attract at least 10-11 million all crop acres for the upcoming U.S. growing season, according to an AgResource Company market note.

The U.S. Department of Agriculture estimated total U.S. production at 12.447 billion bushels, below from the average analyst estimate of 12.491 billion bushels and below the government's previous estimate of 12.540 billion. The 2009 crop totaled 13.110 billion bushels.

The yield estimate of 152.8 bushels per acre was below the average trade guess of 153.9 and below all analyst estimates in a Dow Jones Newswires survey.

USDA lowered its projection for the U.S. corn end-of-year supplies 87 million bushels to 745 million.

The report is supportive for corn prices, encouraging to market bulls looking for confirmation of smaller inventories, analysts said.

While U.S. winter wheat seedings released by the USDA were mostly in line with trade expectations, a 400,000-acre increase in Illinois wheat acres will make it tougher to replenish corn supplies, JP Morgan's Peter Meyer said. "That's corn acreage gone, and that's good corn acreage gone in my opinion," Meyer said. Corn prices must climb to compel farmers to plant more, he added.

U.S. corn used for ethanol was raised 100 million bushels with use for feed and residual lowered by the same amount, USDA reported in Wednesday's reports. Strong demand for corn from the ethanol industry remains a draw on corn inventories.

Traders and analysts had expected the USDA would most likely drop its ending stocks forecast due to strong demand for ethanol.

USDA estimated world corn ending stocks at 127 million metric tons, down from 130 million reported in December.

The long-term outlook for corn remains supportive with U.S. supplies still projected to reach a 15-year low by Aug. 31, 2011, the end of the crop's marketing year, analysts said.

Meanwhile, dryness in Argentina, the second-largest corn exporter after the U.S., has providing some tough growing conditions for corn crops, a supportive factor adding price strength.

-By Andrew Johnson Jr., Dow Jones Newswires, 312-347-4604 andrew.johnsonjr@dowjones.com