* Goldman Sachs recommends taking profits
* Japan's nuclear crisis ranked on par with Chernobyl
* July corn dips by daily 30-cent limit, recovers slightly
* Coming up: U.S. corn planting weather eyed (Recasts to include close of U.S. Tuesday trading session, fresh analyst quotes)
By Sam Nelson
CHICAGO, April 12 (Reuters) - U.S. grain markets posted their biggest drop in almost a month on Tuesday as investors cashed out of commodities, with corn plunging 3 percent.
Some in the market linked the sell-off to Japan upgrading the severity of its nuclear crisis to the same level as the 1986 Chernobyl disaster, the world's worst nuclear accident.
Japan is the world's top importer of corn and a major buyer of wheat and soybeans from the United States.
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.
That supply tightness also helped corn futures show some resiliency on Tuesday as the market by the close recaptured roughly 25 percent of the earlier declines that had driven some months down by the daily limit of 30 cents per bushel.
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.
"Goldman started it when they said to take profits. A lot of markets were overbought and what you saw was a lot of profit-taking and fund long-liquidation," said Dax Wedemeyer, analyst for U.S. Commodities in Des Moines, Iowa.
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.
GOLDMAN FOLLOW-THROUGH
Goldman Sachs on Monday recommended closing its CCCP basket trade first recommended on Dec. 1, 2010. That basket included crude oil, cotton, copper, platinum and soybeans. Goldman said crude oil, cotton and copper had substantially exceeded the firm's targets while platinum and soybean prices lagged.
Goldman 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 $6.20, citing bullish data in a U.S. government stocks report.
Goldman's advice to bank profits did not directly mention grain but those markets were spooked anyway after corn hit a record high of $7.83-3/4 early this week.
Crude oil plunged nearly 4 percent and the benchmark Reuters/Jefferies CRB index shed nearly 2 percent after gaining almost 10 percent since the beginning of 2011.
Traders and analysts said Goldman's recommendation, while central to the sell-off, was not the only reason for the decline in grains and soy.
Japan, the world's third-largest economy and the biggest 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," said Jason Holthaus, an analyst for Country Hedging, Minneapolis, Minnesota. (Reporting by Sam Nelson; Editing by Dale Hudson)