* USDA projects record U.S. corn, soybean crops
* Bargain buying lifts corn from 7-year lows
* Strong export demand underpins soybeans (New throughout, adds comment, updates prices and market activity, changes byline, changes dateline from previous LONDON)
By Karl Plume
CHICAGO, Aug 12 (Reuters) - U.S. corn futures plunged to a seven-year low on Friday and hit contract lows in all months after a the government forecast a larger-than-expected harvest, but the market ultimately closed firm as the low prices prompted bargain buying.
Soybeans eased as the U.S. Department of Agriculture projected the U.S. crop would be the largest ever harvested. Strong demand, particularly from importers in China, offset much of the pressure.
Wheat recovered from early lows and closed slightly higher on short covering.
"I think that stabbing down into new lows opened the door for a lot of users to do some pricing," said Roy Huckabay, analyst with the Linn Group.
"The guys have been really slow to cover September. On this break, they have not only reached out and covered their short basis, they have covered their short futures too," he said.
Chicago Board of Trade September corn futures closed 1-1/4 cents higher at $3.22-1/4 a bushel after sinking as low as $3.12, the lowest point for a spot contract since September 2009. Actively traded December corn gained 1-1/4 cents to $3.33, ending the week down 0.4 percent, the contract's seventh weekly decline in eight weeks.
CBOT September wheat closed up 6-1/4 cents, or 1.5 percent, at $4.22-1/2 a bushel. It was up 1.6 percent for the week, its second straight weekly gain. December through September 2017 futures all hit contract lows.
November soybeans were 2-1/4 cents lower at $9.81-3/4 a bushel, ending 0.7 percent higher than a week ago.
Futures prices slid after the USDA projected record large corn and soybean harvests in a monthly report on Friday, with forecasts for both commodities above even the highest analyst estimates.
But the agency also raised its demand outlook, including for exports, which for soybeans have been stellar of late.
On Friday morning, the USDA confirmed private sales of 258,000 tonnes of new-crop U.S. soybeans to China, the twelfth large soybean sale confirmed by the agency in 13 business days.
For wheat, the USDA slashed its outlook for the EU wheat crop following poor summer weather in key production areas of the bloc. But that was offset by bumper wheat crops in the United States and the Black Sea region. (Additional reporting by Julie Ingwersen; Editing by David Gregorio)