Chicago Board of Trade soybean futures are expected to start Wednesday's day session lower, feeding off government data showing higher than-expected ending stocks.
CBOT soybeans are called to open 10 cents to 15 cents lower.
Higher projected inventories reported by U.S. Department of Agriculture are expected to generate some price weakness, with a rapid seeding pace and South American export competition aiding the declines.
The USDA estimated U.S. 2010-11 soybean ending stocks at 170 million bushels, up 30 million from USDA's estimate in April. The USDA lowered its export estimate by 30 million bushels and left the crush unchanged.
The government raised its estimate of 2010-11 world soybean ending stocks to 63.8 million tons from 60.9 million in April. Brazil's production was raised by 1 million tons to 73 million, while Argentina was unchanged at 49.5 million tons.
"Old crop soy world end stocks of 63.8 million is a huge number out there and will weigh on nearby contracts," said Chad Henderson, analyst with Prime Agricultural Consultants in Brookfield, Wis.
The USDA estimated U.S. 2011-12 soybean ending stocks at 160 million bushels, below the average analyst estimate of 176 million.
U.S. new crop end stocks of 160 million on the other hand are supportive as it doesn't give a lot of wiggle room, Henderson said.
U.S. soybean production in 2011-12 is projected at 3.285 billion bushels, down slightly from the crop produced in 2010 amid lower planted and harvested area and lower yields, USDA said in the report.
"For the new crop, we continue to expect lower acreage to keep the market in a supply deficit although stronger export competition from larger South American supplies in 2011/12 should help limit the U.S. inventory drawdown," according to a market letter form Goldman Sachs.
Further pressure is expected from slower export demand, particularly with the market still holding historically big premiums in the market, said Jason Roose, analyst with Iowa-based brokerage U.S. Commodities.
China, the leading importer of U.S. and global soybeans, has slowed its purchasing of late, as China's soybean demand is reportedly sluggish with port inventories high and supplies at crushing plants at comfortable levels.