04/08/2010 (Agrimoney.com) - Would Turnaround Tuesday lead on to Wobbly Wednesday? Not in early deals, with wheat picking itself up from its first negative close in a week to get back on the offensive.

Egypt, the world's biggest wheat buyer, is not waiting for prices - sent soaring by drought in Russia and parts of neighbouring Kazakhstan and Ukraine – to come down.

It announced its second tender for the grain within a week, the results of which will be announced later on Wednesday, and are being keenly awaited by traders. Will Russia, which has gained a stranglehold over the last year on the tenders, lose its grip?

(Agrimoney.com's betting is not, given that Russia's southern, main exporting regions produced a decent crop before drought set in. However, don't bet on a tender win for Glencore, whose calls on Tuesday for Russia to introduce export curbs have highlighted in the markets the difficulties that merchants may be having to find grain to fulfil contracts.)

Mind the gap
A showing from Egypt reminded investors that consumers were willing to buy even at these levels, a bullish point.

Still, technical factors have gained enhanced importance in such a volatile market, with speculators looking for the chart signals that will enable them to deal before peers, and profit from price swings.

"Funds are in charge," said Mike Mawdsley at broker Market 1, noting a support level at $6.95 a bushel for Chicago's December wheat lot, which stood up 0.9% at $7.16 a bushel at 07:10 GMT (08:10 UK time). (The September contract was 1.0% higher at $6.86 ½ a bushel.)

Below, there were a "multitude of gaps" in the chart, where wheat on its way up last week traded clear of the previous day's range, leaving some territory in between – the "gap" - untouched.

"Markets have a very strong tendency to fill such gaps," said Jaime Miralles at FC Stone, implying some pressure for wheat to trade lower.

'Good close'
Still, this need not be too worrying as November soybeans showed in the last session, dipping to close a chart gap, yet still ending higher for what Mr Mawdsley called a "good close".

Not that all investors appear to agree, with the contract easing 1.75 cents to $10.16 ¼ a bushel in early deals on Wednesday.

Soybeans did have a toe in positive territory, as ever, but that was the privilege of the August lot, which added 0.5 cents to $10.54, still basking in some glory from yet more US sales, of 223,000 tonnes, announced on Tuesday to China.

Rangebound?
Corn's technical criteria, meanwhile, may signal a somewhat stagnant period, according to Jon Michalscheck at Benson Quinn Commodities, based on an analysis of the open contracts in the September lot, which will expire on August 27.

"Based on open interest as of the close on Monday the largest open interest for the September calls and puts are centred around the $4.00 and $3.80 [a bushel] levels respectively," he said.

"In the past that has had a tendency to provide somewhat of a trading range for the underlying futures contract for the expiring options.

"If one trades the extremes that could equate into a $3.70-4.10 [a bushel] trading range in the September futures over the next couple of weeks."

There was little sign of the contract disproving him in early deals, standing 0.5% higher at $3.91 ¼ a bushel.

Palm peaks
Nonetheless, the day belonged to palm oil thus far, with the vegetable oil gaining 0.9% to 2,586 ringgit a tonne and earlier reaching 2,598 ringgit a tonne, a contract high for the October lot and the best for a benchmark contract in four months.

The coming of Ramadan is seen as supportive for prices – prompting stocking up of palm oil in preparation for after-dark feasting.

Prices of rival soyoil and crude oil, an influence on commodities such as palm used in making biofuels, have also been strong in recent days.