Corn extended its gain on Monday amid concerns that demand for U.S. grain will increase as global inventories fall to the lowest.

Corn futures for May delivery increased by 18 cents, or 3.4 percent, to $5.53 a bushel on the Chicago Board of Trade.

Corn prices earlier in the session increased by 20 cents, to $5.555.

The grain export sales from the U.S. increased by 31 percent between Sept. 1 and Feb. 14 but the U.S Department of Agriculture forecasted a 15 percent increase of exports, to 2.45 billion bushels in the year ending Aug. 31.

The U.S. Department of Agriculture said world stockpiles will drop by 5 percent to 101.9 million metric tons by Oct. 1, below 47 percent in the past eight years.

Corn output in the U.S. for 2008 was forecasted to decline by 2 percent to 12.81 billion bushels and demand for the grain will gain 0.5 percent to 13.02 billion, reducing inventories before 2009 harvest by 14 percent.

Overseas sales of U.S. farm goods including corn are boosted by weak dollar and the expansion of emerging economies.

According to government figures, corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, followed by soybeans at $26.8 billion.