By Anna Louie Sussman

NEW YORK, Feb 28 (Reuters) - Commodity revenues fell nearly 40 percent at Morgan Stanley and remained flat at Goldman Sachs Group Inc last year, according to filings from the two biggest Wall Street commodities players that face a changing regulatory landscape.

Morgan Stanley's commodity net revenues decreased by 38 percent from 2012, a second straight annual drop, in what the bank described in its annual report to Securities and Exchange Commission (SEC) as "challenging market-making conditions." Commodities net revenues fell 20 percent in 2012 over 2011.

The dwindling revenues follow tighter restrictions on banks trading with their own money and heightened public scrutiny of their role in the natural resources supply chain.

Goldman Sachs said its commodity net revenues for 2013 were "essentially unchanged" from 2012. The bank had said in 2012 it saw "significantly lower" revenues over 2011.

The bank reported $902 million in revenues from market-making activities in commodities, an 83 percent increase from the previous year. It said those figures did not accurately reflect how it runs its commodities business.

None of the major Wall Street banks provided details on its commodities operations, but overall commodities revenues have waned in recent years.

Total commodity trading revenues on Wall Street have fallen by about two-thirds in the last five years, with the top 10 banks notching just $4.5 billion last year, according to London-based analytics firm Coalition.

In 2009, Goldman Sachs commodity unit J. Aron alone brought in $4.5 billion. By 2011, that had fallen to $1.6 billion.

Morgan Stanley's revenues peaked at around $3 billion in 2008 but fell to around $1 billion by 2011, according to Reuters' calculations. Based on that figure, revenues would have come to around $600 million last year.

Spokesmen for both banks declined to comment on Friday.

IN IT TO WIN IT?

Banks such as JPMorgan Chase & Co, Deutsche Bank AG and Barclays PLC have sold or shuttered some or all of their physical commodities operations, but Morgan and Goldman have indicated they still see opportunities.

Goldman Sachs' chief financial officer reaffirmed in a January earnings call the bank's intent to remain in the commodities trading business, deeming it "too important" to clients to exit.

Morgan Stanley owns several power plants in the U.S. and still trades power, gas and crude oil, among other commodities, although it sold the bulk of its physical crude oil trading operations to Russian oil giant Rosneft Ltd.

The two banks may yet emerge from the U.S. regulatory upheaval better off than their peers, who face potentially tougher new rules, thanks to a longstanding legal exemption that regulators say limits their ability to restrict the banks' activities.