CHICAGO (Dow Jones)--Chicago Board of Trade corn futures are expected to open higher Monday following overnight gains on an improved demand outlook and technical momentum.

Corn is called 1 to 2 cents higher. In overnight trade, May corn was up 1 3/4 cents to $3.68 per bushel and July corn was up 3/4 cent to $3.76.

The July contract settled at a six-week high close on Friday, as the market got a boost from China's purchase of U.S. corn. Expectations that China will purchase more corn, and improved export sales in general, continue to support the market, traders said.

While last week's gains paint an improved technical outlook for corn, there is still "a lot of domestic inventory to move on rallies," a trader said.

Gains will also be limited by bearish supply fundamentals. The U.S. Department of Agriculture will release its weekly crop progress report Monday at 4 p.m. EDT, and estimates for plantings as of Sunday have ranged from 65% and 70%.

Weather in the Midwest, while not ideal, is not posing a significant problem for farmers, traders said. DTN Meteorlogix calls for mostly dry conditions this week except for scattered showers and thunderstorms on Thursday.

Any rains will slow planting, but the majority of the crop, which has already been planted, will benefit, traders said.

Rumors persist about more Chinese purchases of U.S. corn, Ag Resource Co. said in a morning commentary. That supported the market overnight, but if the sales are not confirmed by the USDA by Tuesday morning, "liquidation will become the feature," the commentary said.

Managed money accounts added short CBOT corn positions in the week ended April 27, the Commodity Futures Trading Commission said Friday.

A disaggregated commitments of traders report showed managed money adding 7,266 contracts to its short positions, for a total of 183,745, and cut 2,257 contracts from its long positions, leaving 183,998. Meanwhile the supplemental commitments of traders report showed traditional speculative funds adding 8,108 contracts to their short positions and 3,135 to their long positions, leaving them net short 42,674.

The next downside price objective for the bears is to push and close July prices below solid technical support at last week's low of $3.51 1/2, a technical analyst said. The bulls' next upside price objective is to push and close prices above major psychological resistance at $4.00 a bushel.

First resistance for July corn is seen at last week's high of $3.77 3/4 and then at $3.80, the technical analyst said. First support is seen at $3.70 and then at $3.67.

-By Ian Berry, Dow Jones Newswires; 312-341-5778;