DOW JONES NEWSWIRES

Soybean futures closed weaker Tuesday at the Chicago Board of Trade, pressured by fund and local selling as the market consolidates recent activity and as traders wait to see whether scattered rains forecast for the dry eastern belt materialize, sources said.

Technically bearish price action Monday produced follow-through selling shortly after Tuesday's higher open and the upside was capped. Locals and funds began selling the market lightly and prices eventually fell below unchanged in late activity.

July soybeans settled 3 cents lower at $6.74 3/4 and November beans were down 1/2 cent to $6.85 1/2 a bushel.

July soymeal settled $1 lower at $214.20 a short ton and July soyoil ended 10 points lower at 23.06 cents a pound.

"For the weather we have and the weather that's yet to come, we're priced about right," said independent agricultural analyst John Kleist. "And the next move will be dictated by which side of the weather equation follows through - the dryness or the wetness."

Traders have been concerned for some time now about dry conditions in central Illinois and northern Indiana, and forecasts call for chances of showers there this week and into the weekend.

Afternoon showers are possible in the eastern corn and soybean belt Tuesday through Thursday, though rain amounts will be light and coverage scattered, the DTN forecast said. Coverage is expected to increase in the eastern belt later in the week, and above-normal temperatures will accompany the chance of showers. Highs are seen from 83-93 degrees Fahrenheit each day through the end of the week, which will likely put stress on the crops.

More rains are headed for the western belt, which will likely further hurt emergence in Minnesota and South Dakota. Those states are well behind normal emergence due to cool, wet conditions this season. Rains are expected in northern Iowa, Minnesota and eastern North Dakota, and temperatures are expected from 88-92 degrees F in southern areas while 84-88 degrees F is expected in the north, DTN said.

While those eastern areas desperately need rain, Kleist said it could be a double-edged sword if the hot and wet conditions do arrive. Asian soybean rust thrives in hot, humid weather, which would likely accelerate the spread of the fungal disease.

Nevertheless, even scattered showers could make a difference in central and northeastern Illinois. "Moderate rains in some of those dry areas would forgive a lot of sins," Kleist said.

Traders are also waiting on the June crop production and supply/demand reports from the U.S. Department of Agriculture, scheduled for 7:30 a.m. CDT Friday, and prices will likely consolidate further ahead of this event, Kleist noted.

Technically, a double-top exits on July beans at the $6.95-$6.96, which correlate to Monday's high and the March 16 high. This area now provides strong resistance and will likely limit rally attempts, another analyst said.

In addition, hedging of the new crop around $6.90-$7.00, basis July, pressured prices.

In trades, UBS sold 1,000 July beans, CIS sold 500 July, Citigroup and Rand Financial each sold 300 July and Refco sold 300 November.

D.T. Trading bought 500 July and Man Financial bought 400 July.

Soy Products

CBOT soy product futures closed steady to lower as prices were influenced by the weakening soybean prices. No fresh news was cited for the products and prices were left to the direction of beans, one trader said.

Funds were even buyers and sellers in soymeal, while they were net buyers of 800 soyoil contracts.

July meal made a two-session low of $213.20 at midday and settled $1 above that level.

July soyoil hit a two-session low of 23.02 cents as sell orders hit the market at the close. The contract settled just above that area.

In oil, Prudential Financial and CIS each bought 300 July.

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