DOW JONES NEWSWIRES

Soybean futures are firmer midday Tuesday at the Chicago Board of Trade, supported by dry weather concerns in eastern Midwest areas, though prices are struggling to remain higher amid a lack of bullish conviction by traders, sources said.

At 10:52 a.m. CDT, July soybeans were 2 3/4 cents higher at $6.80 1/2 and November beans were up 3 cents to $6.89 a bushel.

Soybean futures opened slightly higher than expected, traveled to their session highs and immediately began pulling back on a lack of buying conviction by commodity funds, a trader said.

This allowed local traders to sell into the opening and gains were capped. Initial price support was tied to ongoing weather concerns.

"The weather is a longer-term supportive factor for soybeans, and we'll probably see dry conditions prevail through most of Illinois though this week and most of next week," said Brian Hoops, analyst at Midwest Market Solutions in Yankton, S.D.

However, Monday's technically bearish action in the markets has proven to be a drag on prices, and a potential double-top at the $6.95-$6.96 area provides good resistance for July beans and will likely limit rally attempts, said Hoops.

In addition, the market is seeing good hedging of the new crop at $6.90-$7.00, basis July, which is limiting the price gains, he said.

In weather, 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 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 F in southern areas while 84-88 F is expected in the north, DTN said.

In other news, the U.S. soybean crop was reported 62% good to excellent, the U.S. Department of Agriculture said Monday, compared with 65% at the same time last year and better than expectations for around 60% good to excellent. The USDA said 70% of soybeans have emerged, up from 68% in the year-ago period and the 63% five-year average.

Soybean traders are also keeping an eye on developments in Brazil, where allegations that leaders of the Workers' Party had bribed members of Congress to ensure passage of key legislation have increased the chaotic political climate there. The allegations Monday were the latest in a series of allegations of wrongdoing in recent weeks and could at the least embarrass President Luiz Inacio Lula da Silva's administration or at most lead to resignations of key administration officials, reports said.

The latest news has caused traders to sell the Brazilian real and buy the U.S. dollar as a hedge against the turmoil. Officials with the Brazilian central bank said last week they were already looking to buy dollars to increase the bank's foreign reserves.

Brazil is the world's No. 2 soybean producer and the weakening real was thought to have caused some selling in the soybean market on Monday, a CBOT floor source said.

In trades, D.T. Trading bought 500 July soybeans. On the sell side, CIS sold 1,000 July, Rand Financial sold 300 July and Refco sold 300 November.

Soy Products

CBOT soy product futures are trading steady to firmer at midday, support by the light gains in beans.

Trading has been quiet, and light spreading of oil/meal contracts was the only feature, a trader said.

Players in meal were light and scattered at midday.

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

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