(Recasts with tight U.S. soy supplies through fall 2009; new throughout)

By Charles Abbott

WASHINGTON, July 11 (Reuters) - Heavy rains and floods in the Midwest will cut the U.S. soybean harvest by 3 percent and push the farm-gate price to a record $12.75 a bushel, $2.60 more than the 2007 crop, the government projected on Friday.

The Agriculture Department estimate is up by $1 a bushel from its estimate before the floods. Soybean supplies will be tight into fall 2009 at a minimum.

USDA projected a soybean crop of 3 billion bushels, the fourth-largest on record, but 105 million bushels, or 3 percent, less than expected before June rains swamped the Midwest. Growers will harvest 2 percent less soybean land because of the bad weather and yields are down too, said USDA.

"On the soybeans, stocks just remain razor-tight there," said analyst Don Roose of U.S. Commodities.

U.S. warehouses will hold 125 million bushels -- a scant two-week supply -- when this year's crop is ready for harvest, said USDA. The stockpile is projected for 140 million bushels when the 2009 harvest begin, a slight improvement.

Citigroup analyst David Driscoll said tight U.S. supplies would encourage South American farmers to expand their soybean plantings this fall. Brazil could top the United States as a soybean exporter in 2008/09, said USDA.

This year's corn crop was estimated to fetch a farm-gate average of $6 a bushel, also a record and up 20 cents from USDA's June estimate. Farmers are projected to reap 11.715 billion bushels, down 20 million bushels from June but the third-largest crop ever.

"The tighter balance sheet for soybeans and higher soybean prices are expected to drive competition for 2009 acreage, keeping cash and futures corn prices relatively strong but below recent record levels," said USDA.

Slightly less corn -- 50 million bushels a year -- will be used in making ethanol due to a slowdown in the industry, said USDA.

USDA forecast a wheat crop of 2.461 billion bushels, up 23 percent from 2007 and the largest in a decade. Cotton was pegged at 14 million bales, the smallest since 1998.

Although U.S. farmers planted more corn than expected, "heavy June rains and flooding reduced the share of harvested area in the higher-yielding Corn Belt states," said USDA.

The crop would average 148.4 bushels an acre, down 0.5 bushel from estimates before the floods.

At the Chicago Board of Trade, soybeans for delivery in November rose 9 cents a bushel, to $15.96. December corn closed at $7.09-1/4 a bushel, up 5 cents, and September wheat was up 12-3/4 cents, to $8.30-3/4 a bushel. (Reporting by Charles Abbott; Editing by Marguerita Choy)

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