U.S. corn futures jumped Thursday, recovering the previous day's losses as traders refocused on worries that the Midwest drought could substantially shrink this year's corn harvest.

Chicago Board of Trade July futures, thinly traded ahead of the contract's expiration Friday, settled up 20 1/2 cents or 2.7% at $7.71 1/4 a bushel. During the session, July futures traded up to just 17 cents below the all-time front-month high of $7.99 3/4 a bushel.

December corn rose 28 1/4 cents or 4.0% to $7.32 1/4 a bushel.

Midday updates to some weather forecasts on Thursday reduced expectations for rain in coming days, renewing concerns that the drought could further intensify.

The drought has already cut into yield expectations. In a monthly supply-and-demand report Wednesday, the U.S. Department of Agriculture pared its estimate for this fall's corn yield by a higher-than-expected 12% from its forecast last month, to 146 bushels an acre from 166 bushels an acre.

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Analysts expect that the drought could still further reduce the crop's yield potential and that corn-crop condition ratings, reported each Monday by the USDA, could continue to fall.

Drought conditions worsened in the week through Tuesday morning in key corn-growing states, notably including top producer Iowa, according to the U.S. Drought Monitor map updated Thursday.

Speculative and technically driven buying helped drive corn futures higher, said Karl Setzer, an analyst with MaxYield Cooperative in West Bend, Iowa. Speculators who want to bet on the agricultural commodity markets already hold a historically large long position in soybeans, so more of their buying interest turned to corn on Thursday, Mr. Setzer said.

"Comparatively, [speculative] funds are sitting here and they're holding not a very long position in the corn complex," he said.

Soybean futures ended slightly higher, as traders also worried about the U.S. soy crop's potential due to drought. Traders expressed concern that higher prices haven't sufficiently reduced demand, as weekly U.S. export sales of soybeans came in above expectations.

Thinly traded July soybeans rose 2 3/4 cents or 0.2% to $16.25 3/4 a bushel. November soybeans rose 6 1/2 cents or 0.4% to $15.29 a bushel.

Wheat futures also ended higher, boosted mainly by higher corn prices, though analysts are also concerned that wheat supplies could tighten from current high levels. The USDA on Wednesday forecast domestic wheat inventories and total U.S. production at levels below analysts' expectations.