U.S. wheat near 30-month top on supply concerns

MARKETS-GRAINS/ (UPDATE 2)

* Wheat up 0.8 percent, extends gains on supply concerns

* Coming up: USDA seen cutting grain stocks f'cast-1330 GMT

* Corn, soy firm ahead of USDA world demand/supply report

* FAO warns China drought may hit wheat output

(Updates prices, adds, quotes, dateline pvs. SINGAPORE)

By Naveen Thukral and Michael Hogan

HAMBURG, Feb 9 (Reuters) - U.S. wheat futures rose 0.8 percent on Wednesday, building on previous session's rise of almost 2 percent, to hover around a 30-month-high as growing concern over production in China and the United States amid strong demand continued to buoy the market.

Soybeans and corn moved higher ahead of a key U.S. Department of Agriculture (USDA) report on Wednesday which is expected forecast tighter global grain and soybean supplies.

Chicago Board of Trade wheat for March delivery rose 0.8 percent to $8.81-1/4 a bushel at 1154 GMT. March soybeans were up 0.4 percent to $14.41 a bushel and March corn gained 0.6 percent to $6.78-1/4 a bushel.

Benchmark European wheat futures in Paris were also firm, with the Paris March wheat contract up 3 euros or 1 percent at 279 euros a tonne.

"Algeria is in talks about a wheat tender on Wednesday, Iraq has issued a wheat new tender and new tenders are expected from Egypt and Saudi Arabia soon," one European trader said. "This continues to support markets which are facing more bad crop news from China and expectations the USDA will present an even tighter supply picture later on Wednesday."

The USDA's February supply/demand reports on Wednesday were expected to show smaller forecasts of 2010/11 U.S. and world ending stocks for wheat, corn and soybeans.

Jordan bought 100,000 tonnes of U.S. hard wheat on Tuesday and several other countries issued tenders to buy wheat in the last few days, including Turkey, Iraq, Algeria and Bangladesh.

"On the demand front, further actual and announced imports - by Egypt, Iraq, Turkey, Algeria and Bangladesh - are shoring up the expectation of a significant rise in the international demand for U.S. wheat," Germany's Commerzbank said in a report.

Wheat output in China, the world's largest producer and consumer of the grain, may be at risk after severe drought in its main northern producing regions, the United Nation's Food and Agriculture Organisation said.

China's benchmark wheat futures contract, Zhengzhou wheat for September delivery, rose more than 5 percent on Wednesday after traders returned from the week-long Lunar New Year holiday.

"China is in danger for major crop loss if the dryness continues in the wheat areas," said Ker Chung Yang, commodities analyst at Singapore-based Phillip Futures, referring to the United Nations report.

"If China suffers losses and they need to increase imports, it will be bullish for international prices."

Although the USDA report was also expected to bullish for corn and soybeans, the latest crop report from key producer Brazil on Wednesday was good.

The Brazilian government's crop supply agency Conab forecast a record soybean crop of 70.1 million tonnes and raising its estimates for the corn crop to close to last year's level.

(Source: http://www.forexyard.com/en/news/GRAINS-wheat-near-30-month-top-on-supply-concerns-2011-02-09T120938Z-US)