A week before we were to close, our real estate agent tells us that we need to purchase flood insurance and our lender requires it. When we signed all the loan documents and the contract, it was not disclosed that we needed it. Our lender ordered an elevation survey and its on a high risk flooding area. Can we cancel the contract?

I think you should be able to cancel but I am not a real estate expert.
Didn't the seller's disclosure indicate that the property was in a flood plain? The lender has changed the conditions of the loan and that should be grounds for cancellation because you no longer have financing.
In all likelihood, the lender knew the property was in a flood plain, from day 1.
Just my opinion.