GRAINS-Wheat falls 1.2 pct as Ukraine fears ease

* Wheat gained almost 5 pct on Monday on supply worries

* Putin orders troops in military exercise back to base

* Corn retreats after rising to 5-1/2-month high

(Recasts, adds comment, updates prices) SINGAPORE, March 4 (Reuters) - Chicago wheat fell more than 1 percent on Tuesday after Russia's president ordered troops in military exercises in central and western Russia to return to base, raising hopes of lessening tensions with Ukraine, a fellow major grain producer. Wheat had jumped nearly 5 percent on Monday in its biggest gain in more than 1-1/2 years on concerns Russia's military intervention in Ukraine could disrupt supplies from the Black Sea, one of the world's key grain-exporting zones. Moscow had denied that the exercises in central and western Russia, which began last week, had anything to do with events in Ukraine, where Russian President Vladimir Putin has said he has the right to deploy troops to protect Russian compatriots.

News that troops had been ordered back to base sent prices of oil, gold and grains into retreat after they had spiked on Monday as Russia tightened its grip on Ukraine's Crimea region. Equities recovered including Russian stocks. "With Russia recalling their troops, it reduces the risk of escalating tensions between Ukraine and Russia," said Vanessa Tan, investment analyst at Phillip Futures. "This eased concerns that the unrest would disrupt grains exports in the Black Sea region, weighing on wheat prices." Wheat for May delivery on the Chicago Board of Trade was down 1.2 percent at $6.24 a bushel by 0724 GMT. The contract jumped 4.9 percent on Monday, its largest single-day spike since June 2012, and touched a high of $6.44-1/2 - its strongest since Dec. 12.

AUSTRALIA DROUGHT Ukraine will ensure that the political turmoil does not reduce spring grain sowing, the country's new agriculture minister said. But traders there are holding back from new contracts. And analysts and traders say an escalation of tensions between Ukraine and Russia would turn buyers toward the United States, the world's top exporter of the grain. Stronger demand for U.S. wheat cargoes would further tighten wheat stocks there. Last month, the U.S. Department of Agriculture revised its projection for how U.S. wheat stocks would end 2013/14 (July/June), dropping its estimate to 558 million bushels, 50 million bushels below its January estimate.

And that, along with drought conditions in Australia, the world's third largest wheat exporter, would support prices. Dry conditions across Australia's east coast prompted its chief commodities forecaster to estimate an 8.2 percent drop in the country's wheat output to 24.795 million tonnes in the 2014/15 season. The USDA has forecast that Russia and Ukraine will export a total 26.5 million tonnes of wheat in the 2013/14 marketing season, or 17 percent of global shipments. Ukraine alone was forecast to export 10 million tonnes. For corn, Ukraine is projected to export 18.5 million tonnes, or 16 percent of global shipments. Chicago corn dropped 0.4 percent to $4.68-3/4 a bushel after gaining 1.5 percent in the prior session when it peaked at $4.82-3/4, its highest since Sept. 19. Soybeans gained half a percent to $14.16 a bushel. Grains prices at 0724 GMT

Contract Last Change Pct chg Two-day chg MA 30 RSI CBOT wheat 624.00 -7.50 -1.19% +5.90% 585.29 59 CBOT corn 468.75 -1.75 -0.37% +4.63% 441.99 66 CBOT soy 1416.00 6.75 +0.48% +1.87% 1321.02 73 CBOT rice $15.44 $0.05 +0.32% +0.13% $15.54 27 WTI crude $104.10 -$0.82 -0.78% +1.47% $99.79 67


Euro/dlr $1.376 -$0.004 -0.30% +0.38% USD/AUD 0.895 0.002 +0.24% -0.16%

Most active contracts Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight RSI 14, exponential

(Editing by Himani Sarkar and Simon Cameron-Moore)