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3 Big Things Today, March 1

Wheat Futures Rise in Overnight Trading; Ethanol Mandate Proposal Riles Industry.

1. Wheat Futures Surge on Signs of Global Demand

Wheat futures rose in overnight trading on signs that global demand is heating up.

Egypt, the world’s biggest importer of the grain, on Tuesday bought 535,000 metric tons of wheat from global suppliers. While the country didn’t buy any from the U.S., the rundown in global stockpiles is encouraging for growers worldwide.

The tender results also showed that U.S. prices were competitive with global exporters.

Wheat futures for May delivery rose 6¢ to $4.49¾ a bushel overnight on the Chicago Board of Trade. Kansas City futures gained 6½¢ to $4.70 a bushel.

Soybeans and corn also rose overnight. Corn got a boost yesterday from a report that billionaire Carl Icahn and the Renewable Fuels Association sent a proposal to the president that would allow an increase in the amount of ethanol into gasoline in exchange for refiners no longer being tasked with blending.

Corn futures for March delivery added 2¾¢ to $3.76½ a bushel.

Soybean futures for May delivery gained 8½¢ to $10.44¼ a bushel overnight in Chicago. Soy meal futures added $1.80 to $338.20 a short ton, and soy oil rose 0.39¢ to 34.32¢ a pound.

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2. Renewable Fuels Talk Riles Markets, Fosters Uncertainty Over Legality of Deal

In case you missed it – and it was hard to miss – a story broke yesterday saying billionaire Carl Icahn, who is acting as an adviser on energy to the president, and the Renewable Fuels Association hammered out a deal that would overhaul the ethanol mandate in the U.S.

Bloomberg News reported that the Renewable Fuels Association agreed to shift the point of obligation for compliance with biofuel quotes from refiners to blenders. In exchange, gasoline blends containing 15% ethanol, called E15, would be sold year-round in U.S. markets, the news agency said, citing sources familiar with the deal.

The RFA’s Bob Dinneen said the transaction would “greatly expand” markets for ethanol and that it would be a “darned good thing” for producers. He said in a statement that an executive order was not negotiable.

The White House, however, said there was no executive order in the works, and analysts wondered if a change in the mandate could change without approval from Congress.

The chief executive at Poet, the second-largest ethanol producer in the U.S. behind only ADM, said in a statement shortly after the report that he was displeased with the agreement. CEO Jeff Broin called it a “back-room deal made by people who want out of their obligations under the Clean Air Act” and said the RFA doesn’t have the authority to speak for ethanol companies since it counts oil refiners as its members.

He also said Icahn, who is only a civilian adviser to the president, doesn’t have the authority to speak for the government. Icahn’s wealth jumped by more than $100 million on Tuesday after the deal was announced as he’s the majority shareholder in CVR Energy Inc., whose shares jumped almost 8%.

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3. Wisconsin, Michigan Face Winter Weather Advisories, Warnings

A winter weather advisory is in effect for much of Wisconsin and Michigan today as a storm moves into the region.

Snowfall is expected to increase in coverage and intensity in much of the states this morning with accumulations ranging from 3 to 5 inches, according to the National Weather Service. The snow should slow by mid-afternoon but gusty winds will continue to cause snow drifts.

A winter storm warning has been issued for a small sliver of counties in extreme northern Michigan, where as much as 11 inches of snow is expected, the NWS said. Blustery winds will result in blowing snow, as well, reducing visibility and making roads slick.

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