By Luzi Ann Javier and Jae Hur July 22 (Bloomberg) -- Wheat futures dropped for a second day in Chicago after U.S. regulators said they may curb speculation in the grain and as favorable weather helped crops in the U.S. and Canada. The Commodity Futures Trading Commission is “looking very closely” at phasing out waivers that allow index traders to exceed position limits, Gary Gensler, chairman of the commission, told the U.S. Senate Subcommittee on Investigations yesterday. “It’s a bearish influence,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said by phone today. The “announcement will certainly continue to be talked about in the market today, tonight and over the next couple of weeks as more announcements and developments are made.” Wheat for September delivery lost as much as 1 percent to $5.2925 a bushel in after-hours trading on the Chicago Board of Trade, extending yesterday’s 1.4 percent drop. The most-active contract traded 0.8 percent lower at $5.3025 a bushel at 2:12 p.m. Singapore time. The CFTC wants to curb gaps between cash prices and futures that made it difficult for farmers to manage risk, Gensler said. Last year’s surge to record highs left cash prices below those of futures when CBOT contracts expired, creating a gap that made hedging difficult, he said. Prices also fell as weather conditions in major exporting countries continued to help develop the wheat crop and advance harvesting, Mathews said. Crop Weather Rains improved wheat crop conditions in the Canadian Prairies, while cooler temperatures in the northern plains of the U.S. will be beneficial to crop development, forecaster DTN Meteorlogix said in two separate reports yesterday. The U.S. is the world’s biggest exporter of wheat, flour and related products, while Canada ranks third, according to the U.S. Department of Agriculture. About 72 percent of the country’s winter-wheat crop was harvested as of July 19, compared with 66 percent a week earlier, according to a USDA report July 20. Australia, the world’s fourth-largest wheat exporter, may produce more of the grain than previously predicted after rain lifted crop prospects, said National Australia Bank Ltd. Output may reach 23.2 million tons in 2009-2010, agribusiness economist Frank Drum wrote today in an e-mailed report. That’s 3 percent higher than the bank’s June estimate and up 8 percent from last year, he wrote. Corn for December delivery was down 0.2 percent at $3.215 a bushel, after trading as low as $3.21. The grain lost 3.5 percent yesterday after touching $3.205, the lowest for a most- active contract since Dec. 8. Soybeans for November delivery gained 0.7 percent to $9.115 a bushel as of 2:16 p.m. in Singapore after declining 2 percent yesterday. To contact the reporters on this story: Luzi Ann Javier in Singapore at javier@bloomberg.net; Jae Hur in Singapore at jhur1@bloomberg.net

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