U.S. soybean futures are poised for a lower start to Tuesday's day session, succumbing to profit-taking pressure in the absence of fresh supportive news.
In overnight trading, Chicago Board of Trade May soybean future, the most active contract was down 16 cents at $13.47. New crop November futures were down 19 1/2 cents at $13.25 1/2. Analysts expect soybeans to open 15-20 cents lower.
Traders are booking some profits after futures became a little overbought following recent gains, particularly without any fresh news to attract additional buying.
Outside markets are seen lending pressure to prices, with weakness in crude oil and gold futures as well as a firmer U.S. dollar in early trade attracting some speculative selling.
Large projected South American soy crops, with recent rains providing good finishing weather for Argentina crops raised soy production forecasts, according to a Doane Advisory Service market note. The higher crop forecasts coupled with outlooks for export demand to shift to South American origins versus the U.S. provides fundamental pressure for prices.
Argentina's agriculture ministry said in a press release Monday that 2010-11 soybean crop will total 50 million metric ton, confirming earlier informal estimates by the ministry. U.S. Department of Agriculture currently forecasts Argentina's crop at 49.5 million tons.
Harvest pressure from an advancing Brazilian harvest is a bearish factor, although heavy rainfall in parts of Brazil has slowed the harvest.
Brazil's 2010-2011 soy crop is 44% harvested compared with a year ago figure of 56%, agricultural consultancy Celeres said Monday. The figure is a rise of 14 percentage points from one week ago, according to the consultants based in Uberlandia, Brazil.
Brazil and Argentina are the world's second- and third-largest producers of soybeans, respectively, behind the U.S. and are counted on to relieve the strain on tight U.S. supplies.
Traders are expected to reduce some risk exposure heading toward next week's prospective plantings report, with private acreage forecasts expected to provide near-term direction.
Meanwhile, the market is expected to find some support from end user buying, as projected end of year supplies are tight and soybeans remain in a battle for 2011 planted acres with corn and cotton in the U.S. Delta.
Insufficient increases in acreage will require higher-than normal crop yields come summer, if another year of tight supply is to be avoided.
Weakness in world vegoil markets is seen adding pressure to soybeans and soyoil futures, with Malaysian palm oil futures down 3% overnight on fears of increasing production.
Nevertheless, investors remain cautious of risk exposure amid lingering political unrest in the Middle East and North Africa.