U.S. soybean futures are poised to start Thursday's day session with modest declines, as traders take profits on prior gains on outlooks for slowing demand.

Analysts project soybeans to open 1 cent to 3 cents lower on the Chicago Board of Trade. In overnight trading, March soybeans, the most active contract, were down 1/2 cent at $13.85 a bushel.

A combination of declining soymeal demand, improved crop prospects for South American crops and outlooks for slower soybean demand from China heading into the Lunar New Year holidays is seen damping upside momentum.

The announcements of net cancellations of old crop soymeal export sales, larger-than expected December meal stocks and favorable Argentina crop weather for the next week are expected to limit the market's ability to sustain higher price action, said Don Roose, president Iowa-based advisory and brokerage firm U.S. Commodities.

The market lacks fresh supportive news to spark aggressive buying, but with precariously low projected end-of-year inventories and the need for prices to hold levels that will attract additional 2011 acreage, downward pressure is seen limited as well. The market has the potential to trade in both positive and negative territory.

The Lunar New Year holidays in China are seen slowing demand from the world's leading importer of soybeans.

The U.S. soybean export pace has been dependent on strong buying interest from China, but with China buying set to take a siesta during the weeklong holidays beginning Feb. 2, U.S. demand is at risk amid tepid demand from other leading importers.

The U.S. Department of Agriculture's weekly export sales report released Thursday said total soybean export sales were a net 940,300 metric tons for the week ended Jan. 20, with 780,900 tons for delivery in the 2010-11 marketing year. Analysts had forecast sales between 550,000 tons 800,000 tons.

Soymeal sales were a net 46,400 tons, with net sales cancellations of 30,000 tons for the 2010-11 marketing year. Estimates ranged from 125,000 tons to 175,000 tons. Soyoil commitments were a net 13,100 metric tons. Analysts had forecast sales between 10,000 and 20,000 tons.

Traders said the U.S. Census Bureau's December soybean crush data were better than expected. The bureau reported the December soybean crush at 153.05 million bushels, up slightly from the average analyst guess of 152 million bushels.

The number was down from the prior month's total of 155.1 million, due in part to poor margins related to higher soybean prices, analysts said.

The bureau reported soymeal stocks of 510,743 short tons, up from the prior month's total of 484,362. The increase was attributed to slack domestic meal demand, traders said.

Meanwhile, the Telvent DTN weather forecast said rain and storms look to redevelop in the primary corn and soybean areas during the weekend and continue early next week. This helps ease stress to crops and likely improves the prospects for soybeans, Telvent said.