The U.S. Circuit Court of Appeals in Chicago yesterday rejected efforts by the Commodity Futures Trading Commission to stop trading in wheat futures for delivery this month.

After negotiations with the Solicitor General Wade H. McCree, the CFTC announced last night it would not appeal the Chicago decision to the U.S. Supreme Court.

The appeals court decision appeared to limit severely the four-year-old federal agency's powers to police the nation's multi-billion-dollar commodity markets.

The Seventh Circuit Court of Appeals yesterday morning upheld a lower court which on Sunday issued a temporary injunction that had blocked enforcement of the CFTC's order to halt trading in March wheat on the Chicago Board of Trade.

The CFTC issued the order because, it said, four speculators controlled more than 80 percent of the wheat contracts and appeared to be in a position to corner the market and make windfall profits by driving up the price'

One speculator alone held contracts for 2.5 million bushels of wheat, more than the entire supply available to satisfy the whole Chicago market.

The CFTC stopped trading for March delivery on Friday and froze the price at $3.76 3/4 per bushel.

The Chicago Board of Trade sued to overturn that order and after a five-hour hearing Sunday obtained a court order from U.S. District Court Judge John Grady allowing wheat trading to resume on a limited basis yesterday.

CFTC attorneys went to the Circuit Court in an unsuccessful attempt to have the lower court decision set aside.

When that effort failed, trading in March wheat futures resumed at 9:15 a.m. yesterday. Under an unusual restriction imposed by the Board of Trade, trading was permitted for liquidation only, meaning holders of contracts to buy or sell wheat could only make deals to close out their contracts.

Under that restriction and orders from the Board of Trade's elected officials not to permit 78a disorderly market," wheat prices fluctuated within three or four cents of the point where the CFTC had tried to freeze the price.

"We said that's what would happen," commented Robert K. Wilmouth, president of the Board of Trade. "These fellows are responsible for maintaining an orderly market and it was working well."

He said yesterday's trading reduced by one third the number of contracts for delivery this month, which the CFTC had claimed was so large it created the possibility for speculators to force up prices.

He said the exchange had discussed possible problems in the wheat market with the CFTC and urged the federal agency not to act because "we did not see any emergency."

By going to court to challenge the CFTC's power to declare an emergency and stop trading, the Board of Trade directly challenged the emergency powers given the CFTC when the agency was created by Congress in 1974.

In another Commission action yesterday, a Swiss company alleged to be involved in efforts by coffee producting nations to rig American coffee prices was banned from trading in all American futures markets.

The CFTC took the extraordinary action against Wiscope, S.A., a firm that had been active on the New York Coffee and Sugar Exchange.

Wiscope was ordered to end all futures market dealings by April 13, after the firm refused a CFTC order to identify the clients for whom it was buying and selling coffee futures.