* Coast Guard closes 11-mile stretch of Mississippi River
* 40 northbound, 57 southbound vessels halted by closure
* No timetable for river reopening (Recasts, adds details, quotes, updates number of stranded vessels, adds byline)
By Karl Plume
Aug 20 (Reuters) - The U.S. Coast Guard said on Monday that 97 vessels were stranded by low water on the Mississippi River near Greenville, Mississippi, after it closed an 11-mile stretch of the drought-parched waterway for dredging and to replace missing navigation buoys.
The worst U.S. drought in 56 years has left the river there at its lowest point since 1988, a year when a similarly dire drought also stalled commercial traffic on the major shipping waterway.
Further north, dredging operations near St. Louis were halting river traffic for 12 hours at a time as the U.S. Army Corps of Engineers worked to keep a shipping lane wide enough and deep enough for commercial barge tows hauling everything from grain and fertilizer to steel and coal, industry sources said.
Shippers have been told for weeks to limit the amount of cargo loaded onto barges by at least 30 percent so that they sit higher on the water, and to limit the number of barges in tows, but numerous vessels have still run aground up and down the river.
At least three vessels, all with lighter-loaded cargo, ran aground in recent days between Caruthersville, Missouri, and Memphis, Tennessee, the Coast Guard said.
The various river shipping restrictions have reduced the flow of goods to and from Gulf export terminals and driven up the cost of shipping as cargo volumes have declined but fuel and labor costs have not.
Some shipping lines have idled a portion of their barge fleets due to the currently unprofitable freight rates.
"All of the grain export houses are impacted by the closures on the river and, when the river is open, by the reduced drafts. It drives up the costs of delivering grain to the port and it makes logistics a bit of a nightmare," said Jay O'Neil, senior agricultural economist at Kansas State University.
Barge freight rates were only marginally higher on Monday since only minimal volumes of grain were being shipped to Gulf export terminals.
But the upcoming Midwest corn and soybean harvest could propel freight costs higher if river traffic remains severely restricted.
The backup at Greenville included 57 southbound vessels and 40 northbound vessels as of Monday afternoon, said Coast Guard Petty Officer Ryan Tippets, adding that there was no timetable yet for reopening that stretch of the river.
"There's a Coast Guard cutter on scene surveying and remarking the channel (with navigation buoys) right now," Tippets said.
The river was closed on Friday, according to shipping industry sources, although navigation restrictions have been in place in the area since a vessel ran aground at the location on Aug. 11.
(Reporting by Karl Plume in Chicago; Editing by Jeffrey Benkoe and Jim Marshall)