UPDATE 2-USDA projects rising U.S., world wheat stockpiles

* U.S. corn stocks smaller than trade forecasts, wheat larger

Chinese corn crop raised 4 percent from earlier forecast

* World wheat stocks well above market expectations

* Record world rice crop helped by Vietnam, North Korea

By Charles Abbott

WASHINGTON, Dec 11 (Reuters) - The U.S. wheat stockpile for the current season will be above market expectations due to a slump in exports, while corn ending stocks will remain tight as lower prices make the grain more affordable for feeders, processors and exporters, the government said on Tuesday.

The U.S. Agriculture Department (USDA) pointed to "the slow pace of sales" in raising its estimate of U.S. wheat ending stocks by 7 percent, to 754 million bushels. Traders had expected 712 million bushels.

Globally, wheat ending stocks were forecast at almost 177 million tonnes, up from 174 million a month ago and well above market expectations.

In response, the Chicago Board of Trade's most-active wheat futures slumped about 2 percent to their lowest point since July, and European milling wheat futures also fell. CBOT corn futures were up slightly and soybean futures advanced.

"The pace of U.S. export wheat demand has been disappointing, and until we see that improving, they (USDA) will continue to ratchet their export demand lower," said Shawn McCambridge, an analyst at Jefferies Bache.

The outlook for razor-thin U.S. corn and soybean ending inventories for 2012-13 reflected crops hurt by the worst drought in half a century - conditions that could threaten next spring's plantings as well.

"I would say (the report) is supportive for both corn and soybeans, both domestically and globally," said Mike Zuzolo, president of Global Commodity Analytics.

For corn, the USDA stuck to its forecast for ending stocks of 647 million bushels, the smallest in 17 years. Traders had pegged inventories at 663 million bushels.

The USDA lowered its forecast for corn prices by 3 percent, or 20 cents a bushel, from last month.

"Prices received by farmers through October remained well below cash market bids, and this year's early harvest appears to have boosted early-season marketings, placing further downward pressure on the outlook for the season average price," said the USDA.

The government's estimate of soybean ending stocks was in line with expectations at a marginal 130 million bushels, down 10 million from November and far below the year-ago level of 215 million.

"On soybeans, 130 million (bushels) is basically pipeline stocks," said Jim Gerlach, president of A/C Trading.

A bright spot for soybeans was the 10-million-bushel increase in the projected crush on the back of an unexpectedly large increase in soyoil exports following recent robust sales. The U.S. soymeal export forecast was also increased.

SOUTH AMERICA TO THE RESCUE

Projected record-high soybean production in Brazil and Argentina is expected to give the world market an infusion in the spring.

The USDA kept its estimates for South American soybean production unchanged from November at 81 million tonnes in Brazil and 55 million in Argentina, both far above year-ago levels as producers there respond to high prices.

Brazil is poised to become the world's largest soybean producer this season for the first time.

"Everyone is now looking at South American weather and looking to the January (USDA) report," said Don Roose, president of U.S. Commodities, West Des Moines, Iowa.

The USDA raised its estimate of the corn crop in China by 4 percent from a month ago, based on record yields for the world's No. 2 grower. China also had a large wheat crop, up 2 percent from the November estimate.

World corn stocks were forecast at 117.61 million tonnes, slightly below trade expectations.

Helping to push world wheat stocks higher was higher production in China, Australia and Canada.

The rice crop worldwide was forecast at a record 465.3 million tonnes, up 1 million tonnes from last month, on the back of larger crops in Japan, North Korea and, especially, Vietnam.