US wheat futures surged almost 2 per cent to a near-30-month high on Tuesday on strong export demand, coupled with worries about threats to production in China and the US, traders said.

Soybean futures ended higher on a flurry of late fund buying a day ahead of a monthly US government crop report that is expected to show tighter US and world soy stockpiles. But corn closed narrowly mixed.

Wheat futures on the Chicago Board of Trade posted their biggest daily volume since August as the market rebounded from early pressure tied to China's interest rate hike.

China's third interest rate hike since October triggered a sell-off in several commodities, including grains and crude oil, on ideas the move signaled a slowdown in Chinese consumption of raw materials.

But wheat turned up as other traders saw the price break as a buying opportunity, given bullish fundamentals including global worries about food inflation and tight supplies of high-protein milling wheat.

"There's a lot of business around in wheat, so that's keeping wheat strong," said Joe Bedore, CBOT floor manager for trade house FC Stone.

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

On the supply side, worries about the wheat crop in China, the world's largest producer and consumer, added support. The UN's Food and Agriculture Organization said severe drought could threaten wheat production in China.

"People are just catching on that if China has to come into the (wheat) market, it could really shift the market around," said Shawn McCambridge with Prudential Bache Commodities.

However, he cautioned, it will be difficult to gauge the potential of China's winter wheat until the crop breaks dormancy in early spring.

"We've seen these crops bounce back," McCambridge said.

Meanwhile, bitter cold was forecast for the US Plains and Midwest this week, which may stress the dormant wheat crop in some areas and continue to hamper grains transportation.

Traders are closely monitoring the US Plains crop amid tight global supplies of high-quality milling wheat. Crop ratings in key state Kansas have been poor this season due to scarce soil moisture, while a heavy snowpack in the northern US Plains and Canada has raised the risk of planting delays for high-protein spring wheat.

CBOT March wheat settled up 15-1/2 cents at $8.74-1/4 per bushel, after reaching $8.80-3/4, the highest spot wheat price since August 2008.

March soybeans ended up 9-3/4 cents at $14.34-1/4 a bushel while March corn fell 1 cent at $6.73-3/4.

Trading volume in CBOT wheat was estimated at 184,000 contracts, more than double the 30-day average. The total was inflated by heavy spread-based trade on the second day of the five-day "Goldman roll" in which index funds roll long positions in the spot March contract into forward contracts.

Volume in corn was nearly one-quarter above its 30-day average and soybean volume was about one-third higher.

Corn prices lag

Corn futures lagged, under pressure from ideas the market was due for a setback after touching a near-31-month high on Monday.

"I think corn and beans just got a little tired at these high levels," Bedore said. "They're having good rains in South America, so their crops should be big."

Traders were awaiting the US Department of Agriculture's February supply/demand reports on Wednesday, which were expected to show smaller forecasts of 2010/11 US and world ending stocks for wheat, corn and soybeans. – Reuters