U.S. soybean futures are poised for a lower start to Tuesday's day session, as broader based commodity weakness entice traders to book profits.
Analysts project soybeans to open 10 cents to 12 cents lower on the Chicago Board of Trade. In overnight trading, March soybeans, the most active contract, was down 12 1/2 cents at $13.92 a bushel.
The strength of the U.S. dollar is creating weakness in a host of commodity markets from metals, crude oil and grain futures.
The bearish outside market influence reflective of the dollar's strength will trigger some selling as traders reduce risk exposure in the market, said Mike Zuzolo, president Global Commodity Analytics and Consulting.
Improved weather conditions for developing Argentina soy crops is seen adding pressure, as forecasters increase rain chances.
The Telvent DTN forecast calls for major corn and soybean areas of Argentina to see increasing shower and thunderstorm activity during the balance of this week. This likely ends the recent period of hot, dry weather and should help to ease stress to crops, Telvent said.
Argentina is the world's third-largest producer of soybeans behind the U.S. and Brazil, and is counted on to relieve the strain on U.S. supplies amid strong global demand. U.S. end of marketing year supplies are projected to dwindle down to precariously low levels, making strong production in Latin America essential to alleviate the pull on U.S. inventories.
Meanwhile, fears that China may raise there bank lending rates before the start of the Lunar New Year next week in an attempt to control inflation is seen adding some price pressure. The policy move could curb China demand and suppress prices. China is the largest importer of US soybeans.
However, trader's calls are clouded by a large announced sale of U.S. soybeans to China. The sales, the largest single-day export sale of U.S. soybeans in history opens the door for price support.
U.S. Department of Agriculture announced Tuesday, private exporters reported the sale of 2,740,000 metric tons of soybeans for delivery to China during the 2011/2012 marketing year, and sales of 114,000 metric tons of soybeans for delivery to Taiwan during the 2010/2011 marketing year.
The sale is long term bullish for the market, as it shows strong demand will be in place through the next marketing year.