Oct. 3 (Bloomberg) -- Wheat fell by the daily limit for a second day in Chicago on speculation that record prices will spur farmers to plant more of the crop.

Global supplies probably will increase next year because prices have more than doubled in six months, after crops this year were damaged by drought in Canada and Australia and too much rain in the U.S., France and Germany. Wheat production this year is forecast to fall short of consumption for the seventh time in eight years.

``Every farmer in the world will plant wheat next year, because the prices are so high,'' Roland Jansen, chief executive officer of Mother Earth Investments AG in Lichtenstein, said in an interview in London today. Jansen's Mother Earth Resources Fund invests in raw materials and commodities.

Wheat for December delivery fell 14 cents, or 1.5 percent, to $9.085 a bushel at 9:51 a.m. on the Chicago Board of Trade. The contract earlier fell as much as 30 cents, the exchange's daily limit for price changes, after dropping the same amount yesterday.

Jansen said his fund is ``slowly shifting away from wheat and into other grains which are less expensive.''

Wheat's two-day decline snapped an eight-session rally that sent prices to a record $9.6175 a bushel on Sept. 28, the 23rd time the grain has reached a new high since June 27.

The decline was sparked in part by the dollar's rally on Oct. 1 from a record low against the euro, making it more expensive for importing countries to buy wheat from the U.S., the world's largest exporter of the grain. The dollar fell against the euro today, halting two days of gains.

Price Outlook

``The wheat price may find some support around $9 and then $8.75,'' Takaki Shigemoto, an analyst at Okachi & Co., said by phone from Tokyo. He referred to points on historical price charts used by some traders where buy orders may cluster.

Higher wheat costs have spurred companies including Premier Foods Plc, the U.K. maker of Hovis bread, to raise prices. William Morrison Supermarkets Plc, the smallest of Britain's four major grocery chains, said Sept. 20 that the higher costs would ``inevitably'' mean higher retail prices for anything containing flour or milk.

The world's farmers probably will plant more wheat, the International Grains Council said Sept. 27.

Kazakhstan, the third-biggest grain producer in the former Soviet Union, said grain exports will probably be at the top end of its previous estimates as farmers harvest a record of about 22 million tons.

Output was 18.5 million tons last year and the agriculture ministry had said exports this year would be between 8 million and 9 million tons.

Wheat Demand

Demand remains strong for wheat. Egypt, the world's second- largest importer of the grain, bought 80,000 metric tons from Russia for immediate delivery, an official from the North African country said yesterday. Japan bought 19,460 tons of feed wheat at a tender today, the Ministry of Agriculture, Forestry and Fisheries said.

Milling wheat for November delivery on the Liffe exchange in Paris fell 9 euros, or 3.4 percent, to 255 euros ($362) a ton as of 1:55 p.m. Paris time. Prices have almost doubled in a year.

Soybeans for November delivery declined 7 cents, or 0.7 percent, to $9.3675 a bushel. Corn for December delivery fell 5.75 cents, or 1.7 percent, to $3.43 a bushel, declining for a fourth day.

Corn slid 20 cents yesterday, the maximum allowed by the exchange, and soybeans dropped 4.8 percent, the most in two years, on speculation the two biggest U.S. crops may be larger than the government forecast after beneficial rain in August.

Production of corn, the largest U.S. crop, will total 13.445 billion bushels, above a record 13.307 billion forecast last month by the U.S. Department of Agriculture and 28 percent more than in 2006, West Des Moines, Iowa-based FCStone Group Inc. said Oct. 1 after trading closed in Chicago.

The soybean crop was estimated by FCStone at 2.722 billion bushels, up 3.9 percent from the USDA's Sept. 12 forecast of 2.619 billion.

To contact the reporters on this story: Jae Hur in Singapore at jhur1@bloomberg.net; Danielle Rossingh in London at drossingh@bloomberg.net

Last Updated: October 3, 2007 10:54 EDT