* Corn limit up, rises 4.5 pct on bullish USDA stocks data
* Soybeans up 2.8 pct on lower stocks, acreage decline
* Wheat follows corn, soy higher despite bearish USDA data (Updates with closing prices)
By Karl Plume
CHICAGO, March 31 (Reuters) - Grains surged on Thursday, with corn rallying 4.5 percent as strong demand whittled down stocks even as farmers geared up to plant the second-largest area since 1944.
Soybeans soared to a seven-week high after the U.S. Agriculture Department reported on Thursday lower-than-anticipated stocks and spring seedings that were below expectations.
Wheat rose 5 percent, following soaring corn and soybeans despite a bearish stocks estimate and a larger-than-expected jump in the USDA's spring wheat seedings forecast.
"Even though we've seen food inflation and everything else that has taken place, the demand has not backed away. Even at these lofty prices, we're still seeing strong demand in the U.S. and in world markets for agricultural commodities," said Shawn McCambridge, analyst with Prudential Bache Commodities.
"Farmers are following what the market is telling them to do. The acreage numbers we saw today tell us that this battle for acreage will continue going forward and there is not that much acreage out there that is free and available," he added.
Thursday's rally put a positive end on what has been the weakest quarter since mid-2010 as it looked like the surge in grains prices had topped out on expectations of large U.S. crops.
Chicago Board of Trade May corn futures closed up the 30-cent daily limit at $6.93-1/4 per bushel, the strongest gain in nearly two weeks. The contract traded synthetically through options as high as $7.32 a bushel, according to traders, which would be a three-week high.
CBOT May soybeans rose 38-1/4 cents to $14.10-1/4 a bushel, a 2.8 percent gain that was the largest in two weeks, after earlier hitting a seven-week high of $14.32.
CBOT May wheat jumped 36 cents, or 5 percent, to a three-week high of $7.63-1/4 a bushel. The largest percentage gain in two-weeks was also fueled by technical buying as the contract broke through its 200-day moving average.
Spot month corn gained 10.2 percent in the quarter, while soybeans eked out a 1.2 percent gain and wheat fell 3.9 percent.
CORN STOCKS DECLINING
Corn stocks were shrinking faster than anticipated despite prices near highs not seen since the record-setting rallies of 2008.
"The big number was USDA's corn stocks number, which is a reflection of demand and how much corn is moving into the marketing channel," said Jerry Gidel, analyst for North America Risk Management Inc.
"The number suggests feed demand has not declined as some had expected and it suggests ethanol production is staying very strong," he said.
The USDA has already forecast end-of-marketing-year corn stocks at the lowest level in 15 years, but Thursday's low quarterly stocks estimate hinted at an even tighter supply.
"The trade is now wondering if new-crop stocks, which were going to be slightly higher than this year, may now only be equal to this year so people are suggesting new-crop futures need to be at $7 (a bushel)," said Rich Nelson, director of research with consultancy Allendale Inc.
USDA pegged March 1 corn stocks at 6.523 billion bushels, below the range of trade estimates.
BULLISH STOCKS TRUMP ACREAGE
Investors were focused more on the USDA's bullish March 1 corn and soybean stocks estimates than on prospective plantings forecasts that were within the range of pre-report estimates.
Farmers may yet adjust the area devoted to each crop in coming weeks. Such changes will show up in the USDA's acreage report on June 30.
USDA's March 1 soybean stocks estimate of 1.249 billion bushels was below the range of trade estimates, but the oilseed's advance on Thursday was less aggressive than that in corn, which had been trending lower ahead of the report in anticipation of a big increase in acres at the expense of soy.
USDA's eagerly awaited prospective plantings report on Thursday pegged corn seedings at 92.178 million acres and soybean plantings at 76.609 million acres, both within the range of pre-report estimates. (Additional reporting by Sam Nelson, Mark Weinraub and Michael Hirtzer; Editing by Lisa Shumaker)