CHICAGO, Feb 9 (Reuters) - Strong export demand will cut into already tight U.S. supplies of corn and soybeans by more than previously forecast, the U.S. Agriculture Department (USDA) said on Tuesday.

If realized, the U.S. corn and soybean stockpiles would be the smallest in seven years before the next U.S. crop is harvested. Forecasts for low supplies have spurred importers and domestic processors to buy up crops ahead of potential shortfalls.

But the corn stock outlook was still higher than expected, sparking a sell-off in the futures market that had hit a 7-1/2-year high ahead of the report's release. Traders wondered if a less-than-expected increase in the corn export forecast signaled the United States might fail to meet the recent spike in corn demand from China.

"Is the USDA concerned about export capacity?" said Ted Seifried, chief ag market strategist at Zaner Group. "The sales are there, but can the shipments get there?"

USDA in its monthly World Agricultural Supply and Demand Estimates report projected corn ending stocks for the 2020/21 marketing year at 1.502 billion bushels and soybean ending stocks at 120 million bushels. A month ago, USDA pegged corn stocks of 1.552 billion and soybean stocks of 140 million.

Analysts had expected the report to show corn ending stocks of 1.392 billion and soy ending stocks of 123 million, based on the average of estimates in a Reuters poll.

USDA boosted its outlook for soybean exports by 20 million bushels to 2.250 billion and its corn export projection by 50 million to 2.600 billion. It left its forecast for soybean crush - the process where soybeans are converted into meal and oil - unchanged at 2.200 billion bushels.

The government pegged wheat end stocks at 836 million, unchanged from its January outlook.

Chicago Board of Trade corn and wheat turned negative after the report was released while soybean futures retreated from three-week highs. (Additional reporting by Julie Ingwersen; Editing by Caroline Stauffer and Marguerita Choy)