U.S. soybean futures are expected to start lower Wednesday as strength in the dollar and improving crop conditions pressure prices.
Traders predict soybeans for November delivery, the most actively traded contract, will open down 8 cents to 10 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract dropped 10 cents, or 0.8%, to $13.08 a bushel.
The firm dollar is weighing on prices as it makes U.S. goods less attractive to foreign buyers, traders said. Soybeans are expected to stumble in early trading along with other commodities, including corn, wheat and crude oil.
Additional pressure stems from an improving global crop outlook, analysts said. The U.S. Department of Agriculture, in a weekly report Tuesday, raised its good-to-excellent rating for the U.S. soybean crop by one percentage point from last week to 66%.
Weather conditions are expected to remain favorable for the crop in the Midwest this week, according to Telvent DTN, a private forecaster. Temperatures will be warmer to hotter, with adequate moisture in the soil, the firm said.
In Brazil, agricultural consultancy Celeres raised its output forecast 1.8% from last month to 74.9 million tons due to higher productivity and larger-than-expected plantings. Brazil is the world's second largest soybean exporter, after the U.S.
"At this point, we're not under any huge stress," said Jerry Gidel, analyst for North America Risk Management Services, a brokerage in Chicago.
Traders are keeping an eye on global output and weather conditions amid concerns about U.S. inventories of the oilseed. A big harvest in South America should help compensate for potential crop losses in the U.S., where soybeans were planted late in some states due to wet weather.
Soybean futures have pulled back 9% since touching a 2 1/2-year high in February on concerns about strong demand draining supplies. Export demand has been sluggish lately, and traders are watching for potential weather threats that could boost prices.