U.S. soybean futures are poised for a lower start to Tuesday's day session, continuing its retreat from prior gains as slowing demand and increased competition from South America weigh on prices.

In overnight trading, Chicago Board of Trade May soybean futures, the most active contract, was down 9 1/2 cents at $13.74 1/2. New crop November futures were down 7 cents at $13.82.

CBOT soybeans are seen opening 7 cents to 9 cents lower.

The market continues to backpedal despite government forecasts of tight projected inventories, as lackluster Chinese demand in the world soybean market amid negative Chinese soy crush margins limits demand from the world's leading importer of soybeans.

Weak cash basis levels in South America and lingering talk in the market that China is rolling South American soy purchases as well as switching a few U.S. soybean purchases to Brazil provide an opportunity for traders to book profits after last week's run to six week highs, analysts said.

China has cooled their buying in the U.S. and South America, and Brazil and Argentine harvests are aggressively moving along, making it tough to support higher prices, said Don Roose, president Iowa based brokerage U.S. Commodities.

Lower crude oil futures and strength in the U.S. dollar in early trading are seen aiding the lower theme.

A higher U.S. dollar is bearish for commodities as most raw materials are dollar-denominated, making it more expensive for foreign buyers to import. Crude oil influences grain and oilseeds due to their use in making renewable fuels.

Helping to fuel selling among traders was news China raised lending rates for the fourth time since October in an attempt to cool inflation. The increase in rates was lower than expected by the market, but gives traders another reason to justify booking profits, Roose said.

Nevertheless, the market still has a task of slowing usage of already precariously tight projected end of year supplies, but the emergence of fresh South American supplies onto the global market has muted the urgency of demand rationing.

Losses are also seen limited by the market's need to keep prices attractive enough to encourage South American plantings next crop year. However, plantings for next year's South American crop are a long way off, and this will keep a very cautious view on U.S. weather conditions this year.

Meanwhile, weather will also play a key role in price direction as a prolonged wet, cold start to spring could shift some corn acres to soybeans, particularly since corn planted on the same land in successive years produced lower-than-expected yields in 2010.