* Goldman Sachs recommends taking profits
* Japan's nuclear crisis ranked on par with Chernobyl
* July corn falls by daily 30-cent limit
* Coming up: U.S. corn planting weather eyed (Adds fresh prices, new analyst quotes, details of corn's inversion to wheat, U.S. corn fundamentals/plantings, latest CFTC positions in corn)
By Sam Nelson
CHICAGO, April 12 (Reuters) - U.S. grain markets fell on Tuesday in a broad commodities sell-off, with corn futures sinking as investors cashed out profits from its recent surge.
For the first time since 1996, spot wheat futures fell below those for corn due to tight supplies that have triggered record-high corn prices -- a situation that could prompt livestock feeders to switch from corn to wheat.
Wheat futures at the Chicago Board of Trade fell nearly 5 percent, while soybeans slid 3 percent in a second day of selling that started when long-time commodity bull Goldman Sachs told clients to take profits in oil.
The two-day sell-off in grains comes after a recent rally in prices, led by corn futures which hit record highs.
Speculators had been adding to their holdings of corn as prices climbed to record levels.
The U.S. Commodity Futures Trading Commission said that, as of a week ago, speculators were net long CBOT corn futures by 266,089 contracts, up 33,129 contracts from the previous week.
Wheat and soybeans posted their biggest two-day drop in a month and corn was down 3 percent from its record high of $7.83-3/4 hit early on Monday.
Futures also were weighed down by Japan upgrading the severity of its nuclear problem. It put the crisis on par with the Chernobyl disaster in Ukraine in 1986, the world's worst nuclear disaster.
GOLDMAN FOLLOW-THROUGH
"The Goldman recommendation started to break crude oil yesterday, there is follow-through today and that's affecting grains as well," said Jason Holthaus, an analyst for Country Hedging in Minneapolis.
Goldman Sachs has long been known as a commodity bull. On April 1, the firm raised its forecast for Chicago Board of Trade corn futures to $8.60 from its previous outlook for $6.20, citing bullish data in a U.S. government stocks report.
Goldman's advice to bank profits spooked grains markets after corn hit its record high early this week.
At 11:13 a.m. CDT (1613 GMT), CBOT May corn was down 19 cents at $7.57 and July was lower but off initial losses when it traded down the daily 30 cent limit.
May wheat was down 41 at $7.57-1/4 and soybeans for May delivery were down 36-1/2 cents at $13.32.
Crude oil plunged nearly 4 percent and the benchmark Reuters/Jefferies CRB index shed nearly 2 percent after gaining nearly 10 percent since the beginning of 2011.
Traders and analysts said Goldman's recommendation, while central to the sell-off, was was not the only reason for the decline in grains and soy.
Japan, the world's third largest economy and the largest importer of corn, continued to deal with a devastating earthquake and tsunami of a month ago, raising the severity of radiation leaks from a damaged nuclear reactor.
"Japan's situation is having an impact on futures. They are a large importer, especially of corn, so any change in the nuclear problem there will affect the market," Holthaus said.
CORN FUNDAMENTALS REMAIN BULLISH
Despite Tuesday's decline, fundamentals in the corn market remain bullish with strong demand from food and fuel sectors amid the tightest stocks since the 1930s.
Traders said the corn market should continue to attract investors as the outlook for strong demand remained intact.
"The fundamentals for corn are very supportive. Corn might break down for the near-term but I don't think there will be any big selling until the crop gets planted," Holthaus said.
The United States, the world's largest grain exporter, runs the risk of depleting its corn supplies before the autumn harvest unless demand wanes.
U.S. farmers have planted 3 percent of intended corn acreage so far this year, the U.S. Agriculture Department said after the market closed on Monday.
Record futures prices for corn and tight global stocks prompted farmers in southern stretches of the Corn Belt to start their planting a little bit early as many hope to boost their total corn acreage this year. But wet conditions prevented most farmers in key corn-producing states such as Illinois and Indiana from getting an early start on their planting. (Reporting by Sam Nelson; editing by Jim Marshall)