Q4 2023 Nutrien Ltd Earnings Call

Operator: Greetings and welcome to Nutrien's 2023 4th Quarter Earnings Call. At this time, all participants are in a listen-only mode.

Greetings and welcome to <unk> 2023 fourth quarter earnings call.

At this time all participants are in a listen only mode.

Operator: A question-and-answer session will follow after the formal presentation. As a reminder, this conference call is being recorded. I would now like to turn the conference call over to Jeff Holzman, Vice President of Investor Relations. Please go ahead.

And answer session will follow after the formal presentation. As a reminder, this conference call is being recorded.

I would now like to turn the conference call over to Jeff Hoffman, Vice President of Investor Relations. Please go ahead.

Jeff Holzman: Thank you, operator. Good morning, and welcome to Nutrien's fourth quarter 2023 earnings call. As we conduct this call, various statements that we make about future expectations, plans, and prospects contain forward-looking information. Certain material assumptions were applied in making these conclusions and forecasts, and actual results could differ materially from those contained in our forward-looking information.

Thank you operator, good morning, and welcome to nutrients fourth quarter 2023 earnings call.

As we conduct this call various statements that we make about future expectations plans and prospects contain forward looking information certain material assumptions were applied in making these conclusions and forecasts. Therefore actual results could differ materially from those contained in our forward looking information.

Jeff Holzman: Additional information about these factors and assumptions is contained in our quarterly report to shareholders, as well as in our most recent annual report, MD&A, and annual information form filed with the Canadian and U.S. Securities Commissions. I will now turn the call over to Ken Seitz, President and CEO, and Pedro Ferrar, our CFO, for opening comments before we take your questions. Good morning.

Additional information about these factors and assumptions are contained in our quarterly report to shareholders as well as our most recent annual report MD&A and annual information form filed with Canadian and U S Securities commissions.

I will now turn the call over to Ken Seitz, President and CEO and Pedro Farah, our CFO for opening comments before we take your questions.

Good morning, Thank you for joining us today as we recap our 2023 results and provide an outlook for the business and our strategic priorities for the year ahead.

Ken Seitz: Thank you for joining us today as we recap our 2020 third results and provide an outlook for the business and our strategic priorities for the year ahead. Nutrien delivered adjusted EBITDA of $6.1 billion in 2023. We generated $5.1 billion in cash from operations supported by the counter cyclical release of working capital and retail.

Nutrient delivered adjusted EBITDA of $6 1 billion in 2023, we generated $5 $1 billion in cash from operations supported by the counter cyclical release of working capital in retail.

Ken Seitz: In response to changing market conditions, we took several actions during the year to enhance free cash flow, including a reduction in planned capital and operating expenditures of approximately $400 million. We maintain a balanced approach to capital allocation, investing to sustain and grow our assets and returning a total of $2.1 billion to shareholders through dividends and share buyback. As the year progressed, we saw increased market stability and strong fertilizer demand in North America supported by improved grower affordability and an extended fall application season and low channel inventory. Demand in key offshore markets also increased in the second half, however, the level of market stabilization varied by product and geography. Nutrien sells volumes for our global retail business increased by 10% in 2023, as growers work to replenish nutrients in the soil.

In response to changing market conditions, we took several actions during the year to enhance free cash flow, including a reduction in planned capital and operating expenditures of approximately $400 million.

We maintain a balanced approach to capital allocation investing to sustain and grow our assets and returning a total of $2 1 billion to shareholders through dividends and share buybacks.

As the year.

Progressed, we saw increased market stability and strong fertilizer demand in North America supported by improved affordability and extended fall application season, and lower channel inventories.

Demand in key offshore markets also increased in the second half however, at the level of market stabilization varied by product and geography.

Revenue trio sales volumes for our global retail business increased by 10% in 2023 as growers work to replenish nutrients in the soil.

Ken Seitz: Due to the strength of grower demand in all regions, we ended the year with retail fertilizer inventories down 10% compared to the prior year. Crop protection sales volumes and margins in North America returned to normalized levels in the latter part of the year, and we continued to be opportunistic in our approach to restocking inventories. In Brazil, we significantly reduced our crop protection inventories in the fourth quarter, but margins remained challenged due to the persistence of higher inventory in the channel. For the full year, Nutrien Ag Solutions delivered adjusted EBITDA of $1.5 billion, down from the record prior year and well below the level we would view as normalized earnings.

Due to the strength and grow our demand in all regions. We ended the year with retail fertilizer inventories down 10% compared to the prior year.

Crop protection sales volumes and margins in North America returned to normalized levels in the later part of the year and we continue to be opportunistic in our approach to restocking inventories.

In Brazil, we significantly reduced our crop protection inventories in the fourth quarter, but margins remained challenged due to the persistence of higher inventory in the channel.

For the full year nutrient AG solutions delivered adjusted EBITDA of $1 5 billion down from the record prior year and well below the level, we would view as normalized earnings.

Ken Seitz: We've tightly managed inventory and advanced a number of strategic initiatives that position our retail business for growth in 2024 and beyond. One of the areas of growth is our proprietary products portfolio. In 2023, these high-value products contributed gross margin of $1 billion, including increased sales and margins from our proprietary plant nutritional and biostimulant product lines. Gross margin for our crop nutritional products has grown at an annual rate of 15% over the last five years, and we plan to continue to invest in our supply capabilities through differentiated product offerings and expanded manufacturing capacity. We completed a number of tuck-in acquisitions in 2023 and will pursue targeted opportunities in our core markets going forward. As it relates to Brazil, the long-term prospects for agriculture are positive, and it remains an important crop input market for Nutrien. In the near term, our focus will continue to be on the integration of recent acquisitions and optimizing our cost structure in this market.

We've tightened the managed inventory and advanced a number of strategic initiatives that position, our retail business where growth in 2024 and beyond.

One of the areas of growth is our proprietary products portfolio. In 2023. These high value products contributed gross margin of $1 billion, including increased sales and margins from our proprietary plant nutritional and bio stimulant product lines.

Gross margin for our crop nutritional products has grown at an annual rate of 15% over the last five years and we plan to continue to invest in our supply capabilities through differentiated product offerings I think <unk>.

Banded manufacturing capacity.

We completed a number of tuck in acquisitions in 2023, and we will pursue targeted opportunities in our core markets going forward.

As it relates to Brazil, the long term prospects for agriculture are positive and it remains an important crop input market for nutrient.

In the near term our focus will continue to be on the integration of recent acquisitions and optimizing our cost structure in this market.

Ken Seitz: In potash, we delivered adjusted EBITDA of $2.4 billion in 2023, down from the prior year's record due to lower realized prices. North American sales volumes increased significantly in the second half of the year, supported by low-channel inventories and a strong fall application season. We utilized our network flexibility to increase granular potash production and position products across our distribution channel in anticipation of higher seasonal demand and prices in North America. Our offshore potash sales volumes also increased in the second half of 2023, driven by stronger demand in Brazil and China, while net realized prices were impacted by lower global benchmarks and higher logistics costs associated with outages at Campa, Texas export terminals. Our potash controllable cash cost of $58 per tonne was flat year over year, demonstrating our focus on maintaining a low cost position.

In potash, we delivered adjusted EBITDA of $2 4 billion in 2023 down from the prior year's record due to lower realized prices.

North American sales volumes increased significantly in the second half of the year supported by low channel inventories and a strong fall application season.

We utilized our network flexibility to increase granular potash production and position products across our distribution channel in anticipation of higher seasonal demand and prices in North America.

Our offshore potash sales volumes also increased in the second half of 2023, driven by stronger demand in Brazil and China.

Net realized prices were impacted by lower global benchmarks and higher logistics costs associated with outages at Canpotex is export terminals.

Our potash controllable cash cost of $58 per ton was flat year over year, demonstrating our focus on maintaining our low cost position.

Ken Seitz: We advanced to mine automation products that enhance productivity and safety, increasing our annual potash ore tons cut using autonomous mining technology by 40% in 2023. Turning to nitrogen, we generated $1.9 billion in adjusted EBITDA in 2023. That's lower benchmark prices more than offset lower natural gas costs compared to the prior year. We completed major maintenance turnarounds at our Geismar and Borger plants in the second half and initiated actions at our Trinidad facility that are expected to support higher operating rates going forward. We completed our phase one GHB abatement program in 2023, which will be a key contributor to reducing greenhouse gas emissions. This included a carbon capture project at Redwater that increased our low carbon ammonia production capability to 1.2 million tonnes.

We advanced the mine automation products that enhance productivity and safety, increasing our annual potash ore tonnes cut using autonomous mining technology by 40% in 2023.

Turning to nitrogen, we generated $1 9 billion and adjusted EBITDA in 2023.

Lower benchmark prices more than offset lower natural gas costs compared to the prior year.

We completed major maintenance turnarounds at our Geismar and borger plants in the second half and initiated actions at our Trinidad facility.

Expected to support higher operating rates going forward.

We completed our phase one ghb abatement program in 2023, which will be a key contributor to reducing greenhouse gas emissions.

This included a carbon capture project at Red water that increased our low carbon ammonia production capability to one 2 million tons.

Ken Seitz: In phosphate, we delivered full-year adjusted EBITDA of $470 million and focused on operational efficiency and product mix opportunities that enhanced margins and cash flow. We completed maintenance turnarounds at our Aurora and White Spring plants that enabled higher operating rates in the second half and are expected to support increased volumes in 2024. To summarize, following a period of unprecedented market volatility, we are encouraged by the increased market stability and recovery in demand that occurred in the second half of 2023. During this time, we focused on initiatives that strengthened our core business, maintained the low-cost position and reliability of our assets, and positioned the company for growth in the years ahead. Now, turning to the outlook for 2024.

In phosphate, we delivered full year adjusted EBITDA of $470 million.

On operational efficiency and product mix opportunities that enhance margins and cash flow.

We completed maintenance turnarounds at our Aurora in White Springs plants that enabled higher operating rates in the second half and are expected to support increased volumes in 2024.

To summarize following a period of unprecedented market volatility. We are encouraged by the increased market stability and recovery in demand that occurred in the second half of 2023.

During this time, we focused on initiatives that strengthened our core business.

Maintaining the low cost position and reliability of our assets and positioning the company for growth in the years ahead.

Now turning to the outlook for 2024.

Ken Seitz: Global grain stocks-to-use ratios remain historically low, and tightening supplies of wheat and rice have offset increased corn production in the U.S. and Brazil. Crop prices have declined from their historically elevated levels in 2022, but lower input prices have resulted in improved demand. In North America, we witness the strength of fertilizer demand during the fall season, and it is carried through to healthy grower prepay commitments and a strong seed order book for spring planting in 2024. In Brazil, there is some uncertainty over safrinha corn plantings in 2024.

Global grain stocks to use ratios remain historically low as tightening supplies of wheat and rights of offset increased corn production in the U S and Brazil.

Crop prices have declined from the historically elevated levels in 2022, but lower input prices have resulted in improved demand.

In North America, we witnessed the strength of fertilizer demand during the fall season, and it is carried through to healthy grow our prepay commitments and a strong seed order book for spring planting in 2024.

In Brazil, there is some uncertainty over Sabrina corn plantings in 2024, however, soybean acreage is projected to expand and we anticipate seasonal strength in fertilizer imports during the second and third quarters.

Ken Seitz: However, soybean acreage is projected to expand, and we anticipate seasonal strength and fertilizer imports during the second and third quarters. For potash, we expect global demand will continue to recover towards trend levels in 2024, with shipments projected between 68 to 71 million tons. In North America, we are seeing strong potash demand ahead of the spring application season as channel inventories were tight to start the year. We expect increased potash demand in Southeast Asia driven by lower inventory levels and favorable economics for palm oil and rice. China's potash consumption was estimated at a record of approximately 17 million tons in 2023, supported by strong affordability and as a part of a long-term strategy to increase domestic food production.

For potash, we expect global demand will continue to recover towards trend levels in 2024 with shipments projected between 68 to 71 million tonnes.

In North America, we are seeing strong potash demand ahead of the spring application season.

Channel inventories were tight to start the year.

We expect increased potash demand in southeast Asia, driven by lower inventory levels.

And favorable economics for palm oil and rates.

China's potash consumption was estimated at a record of approximately 17 million tons in 2023 supported by strong affordability and as a part of our long term strategy to increase domestic food production.

Ken Seitz: In 2024, we expect lower potash imports in China compared to the record in 2023, but for consumption to remain historically strong. Global nitrogen markets continue to be impacted by regional supply constraints, changes in natural gas prices, and seasonal buying patterns. These impacts have been evident in the first quarter as ammonia prices have seasonally weakened, while global urea values have strengthened in response to increased demand ahead of the spring season. The U.S. nitrogen market is currently tight, and net import volumes were down significantly through the first half of the fertilizer year.

In 2024, we expect a lower potash imports in China compared to the record in 2023, but for consumption to remain historically strong.

Global nitrogen markets continued to be impacted by regional supply constraints changes in natural gas prices and seasonal buying patterns.

These impacts have been evident to the first quarter as ammonia prices have seasonally weakened while global urea values have strengthened in response to increased demand ahead of the spring season.

The U S. Nitrogen market is currently tight and net import volumes were down significantly through the first half of the fertilizer year.

Ken Seitz: North American natural gas prices remain very competitive compared to Europe and Asia, and we are well positioned to supply our customers this spring. I will now turn it over to Pedro to provide more detail on our guidance assumptions and capital allocation plans for 2024. Thanks, Ken.

North American natural gas prices remained very competitive compared to Europe, and Asia, and we are well positioned to supply our customers. This spring.

I will now turn it over to Pedro to provide more detail on our guidance assumptions and capital allocation plans for 2024.

Thanks, Ken.

Pedro Ferrar: As disclosed in our earnings release, we have revised our guidance practice for 2024 to focus on providing forward-looking estimates that we believe are of value to our shareholders and are less impacted by changes in fertilizer commodity prices. We continue to provide guidance for retail adjusted EBITDA, fertilizer sales volumes, key financial modeling variables, and pricing sensitivities. We have also provided adjusted EBITDA scenarios for our fertilizer business in our earnings presentation posted on our website. For retail, our full-year adjusted EBITDA guidance is $1.65 to $1.85 billion.

Disclosed in our earnings release, we have revised our guidance practice in 2024 to focus on providing forward looking estimates that we believe <unk> value to our shareholders and our less impacted by changes in fertilizer commodity prices.

We continue to provide guidance for retail adjusted EBITDA fertilizer sales volumes key financial modeling variables in pricing sensitivities.

We have also provided the adjusted EBITDA scenarios for our FERC lines of business in our earnings presentation posted on our website.

For retail our full year adjusted EBITDA guidance is $1 65 to $1 85 billion.

Pedro Ferrar: The midpoint of this range represents an increase of approximately $300 million compared to last year, driven by increased gross margins in all major product lines. We expect crop nutrient gross margins to be supported by higher sales volumes and per ton margins, in particular compared to the compressed levels in the first half of the prior year. Further underpinning this growth is the continued expansion of our proprietary nutritional and bio-stimulant product line.

The midpoint of this range represents an increase of approximately 300 million compared to last year driven by increased gross margins in all major product lines.

We expect crop nutrient gross margins will be supported by higher sales volumes and bird ton margins in particular compared to the compressed levels in the first half of the prior year.

Further underpinning this growth is the continued expansion of our proprietary nutritional bio stimulant product lines.

Pedro Ferrar: In Brazil, we expect increased crop input sales volumes in 2024 and an improvement in crop protection margins in the second half of the year. Our annual potash sales volume guidance of 13 to 13.8 tons assumes demand growth in offshore markets and a return to more normal operations at Campotex ports in 2024. In North America, based on strong participation in our winter fuel program, we expect higher first quarter sales volumes compared to the prior year and a typical pricing reset compared to the fourth quarter of 2023. Mine automation and other efficiency-related initiatives are expected to keep our potash controllable cash costs of production similar to last year. Nitrogen sales volumes are projected to increase by approximately 500,000 tons at the midpoint of our guidance range, supported by higher operating rates at our U.S. and Trinidad plants. We assume Henry Hub natural gas prices will average around 2.5 per mm BTU, and our Alberta nitrogen plants will benefit from the typical discount to Henry Hub.

In Brazil, we expect increased crop input sales volumes seen in 2024, and an improvement in crop protection margins in the second half of the year.

Our annual potash sales volume guidance of 13% to $13 eight tons assumes demand growth in offshore markets and a return to more normal operations that canpotex ports in 2024.

In North America based on strong participation in our winter fill program, we expect higher first quarter sales volumes compared to the prior year and a typical pricing reset compared to the fourth quarter of 2023.

Mine automation and other efficiency related initiatives I expect it to keep our potash controllable cash costs of production similar to last year.

Nitrogen sales volumes are projected to increase by approximately 500000 tons at the midpoint of our guidance range supported by higher operating rates at our U S and Trinidad plants.

We assume Henry hub natural gas prices will average around $2 five and then Btu an hour burrito nitrogen plants will benefit from the typical discount to Henry hub.

Pedro Ferrar: Total planned capital expenditures of $2.2 to $2.3 billion are down approximately $400 million compared to 2023. This includes approximately $500 million of investing capital on initiatives that drive organic growth in retail and operational improvements in potash and nitrogen. The focus in retail is to further expand our proprietary products portfolio, drive retail network optimization, and enhance our digital capabilities. In addition, we will continue to be opportunistic on token acquisitions in our core markets. The majority of the planned investment capital in our operations is focused on mine automation projects in potash and low-cost brownfield expansions in nitrogen.

Total planned capital expenditures of $2 to $2 3 billion is down approximately 400 million compared to 2023.

This includes approximately 500 million of investing capital on initiatives that drive organic growth in retail and operational improvements in potash and nitrogen.

The focus in the retail is to further expand our proprietary product portfolio drive retail network optimization and enhance our digital capabilities.

In addition, we will continue to be opportunistic tuck in acquisitions in our core markets.

The majority of the planned investment of capital in our operations is focused on.

Mine automation projects in potash and low cost brownfield expansions of nitrogen.

We continue to target a stable and growing dividend.

With the increase approved by our board of directors yesterday nutrients dividend per share has increased by 35% since the beginning of 2018.

Similar to the past, we will evaluate the potential for additional shareholder distributions as the year progresses, I will now turn it back to Ken.

Thanks Pedro.

As we look ahead to 2024, we expect increased crop input market stability and demand providing the opportunity for nutrient to deliver higher fertilizer sales volumes and growth in retail earnings.

We will continue to prioritize strategic initiatives that enhance our ability to serve growers in our core markets maintain the low cost position and reliability of our assets and position the company for growth.

We are hosting an investor day in New York on June <unk>, where we will provide more details on the strategic priorities across our integrated business. So watch for more details on this event over the next few weeks.

We would now be happy to take your questions.

Thank you ladies and gentlemen, we will now begin the question and answer session. If you have a question. Please press star followed by the number one on your Touchtone phone.

He was here at the <unk> prompt acknowledging your request.

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Your first question comes from the line of Steve Hansen from Raymond James Your line is now open.

Yes, good morning, guys. Thanks for the time.

Was hoping you could dig into your outlook on the southeast Asian demand profile for potash in particular, it's been one of the weaker price points in the market for the past year or so but you've described some good economics supporting demand I'm, just trying to get a sense, whether you've got good visibility into that whether you've seen order flow or what kind of sort of outlook. You have there that gives you that confidence.

Yes, good morning, Steve and indeed.

When we say 68 to 71 million tons for 2020 for Southeast Asia is certainly a part of that story and it's owing to a few things one inventory levels are low in southeast Asia entering the year and two looking at about a 3800 ring it per ton.

Price for Palm oil that makes the economics of palm oil given where crop prices have gone that looks favorable so low.

Low inventories and.

And improved economics in Southeast Asia makes makes that 68 to 71 million tons, we think that as I say southeast Asia is going to play a meaningful role in that.

Hand, it over to Mark and maybe Mark can just talk to some specifics around numbers Yep, Hey, Steve. Good morning, So just to reiterate a few of the things that Ken mentioned I think in southeast Asia. We've had two years in a rollout.

Consumption and shipments that would be less than normal. So we've got inventories that need to be restocked and I think throughout the process.

2023, we.

We saw high cost inventories get worked down and are coming into 2024, and a much better position as.

As Ken mentioned.

There are attractive economics in southeast Asia for for Palm oil Rice as a part of that picture as well that's playing a role that we think will lead to a positive rebound in demand there and if you look at our global picture in terms of where we expect demand growth to come from in 2020 for Southeast Asia is actually the biggest single contributor to that at the midpoint.

Got southeast Asia by about 2 million tons from a shipment standpoint, and and are optimistic based on what we've seen moving through the fourth quarter of 2023, and so far in Q1, we understand there has been solid movement and good shipments into southeast Asia. So overall as Ken said, we're positive and constructive on what we expect to see from.

Southeast Asia this year for potash.

Your next question comes from the line of Joel Jackson from BMO Capital markets. Your line is now open.

Good morning.

Let's talk about free cash flow and the buyback.

Allocation.

Can you talk about.

Do you see free cash flow being similar in 'twenty four 'twenty three.

Re upped your authorization and in the months, although you didn't really do a lot of the buyback under the prior authorization you had a lot of buybacks in Q1 under the prior prior authorization, so I'm trying to get a sense of.

Do you think that your buyback.

On 24 will be similar to 2003 in terms of total numbers, even understanding that was heavy Q1 early too early to three under the prior prior authorization.

And where that plays out optimization really Max out as much as you can do for buyback versus other things like maybe doing some more opportunistic M&A in the U S. A result of retail for example.

Good morning, Julien, Yes. Thank you for the question so with respect to 2020 for free cash flow, obviously as we've talked about we've made some changes to our capital program and we brought down some of those investing dollars.

And getting highly focused on the things that we talk about like proprietary products in retail like network optimization like our digital investments and yes, we will absolutely continue to look at opportunistic tuck ins in <unk>.

<unk> America, and Australia, we we have a history of those things in.

The economics for those things continue to prove out so we'll always look at those focusing on mine automation and reliability projects and finishing up some of the debottlenecking in brownfield investments and nitrogen did that that's our focus from a capital point of view as it relates to the year. This number of moving parts. So we saw the working cap.

Capital give back in the fourth quarter of last year.

We are expecting from a cash conversion point of view to go back to more normalized levels of about 70%. So you put that altogether and it says well, let's see now how the year unfolds.

Just come out a period of unprecedented volatility in end markets are stabilizing.

Retain potash returning to sort of trend level demand. These are all good signpost, but.

As it relates for the as.

As it relates to the opportunity for continued distribution through share buybacks, we're always going to look at that that's why we renewed the CIB, but it's a matter of watching how the year unfolds now.

Your next question comes from the line of Adam Samuelson from Goldman Sachs. Your line is now open.

Yes. Thank you good morning, everyone.

Was hoping to maybe ask you about the nitrogen business and your own outlook for.

For improved production and reliability.

In 2020 for one of your North American peers.

Alluded to weather issues impacting production.

In January because of weather.

Did you face any similar issues.

Help us think about.

Given the capital invested.

In recent years increase.

Increase the capacity that Hasnt really come through in terms of production and sales volumes YY, we should have confidence that this year youre going to start to see the benefits of those actions, especially where you just took an impairment done.

The Trinidad.

No that's great and thank you Adam and yes.

We have made a number of investments across the network to improve reliability and certainly for the absolute majority of our plants. We are really happy with the way they are writing.

We continue to assume that we're going to be curtailed oil and gas in Trinidad Thats part of the story for 2024.

But the things that we control we do have a number of in flight projects that give us confidence on improving reliability and all.

I'll hand, it over to Trevor Williams, our head of nitrogen and phosphate to talk about that alright, thanks, Ken and thanks for the question, Adam and I'll take you back to our Q3 earnings call. We communicated that were taken several proactive steps to address some of the reliability challenges that we had a couple of our facilities.

Just to bring you back. These actions included pulling forward a couple of major turnarounds at our facilities.

As well as returning to operation one of our previously idle facilities or sites in Trinidad, which really allows for greater overall operational flexibility.

As well as having the ability to more effectively manage through the impact of some of the gas curtailments and things that we've seen.

In Trinidad.

And finally <unk>.

With respect to the.

The Trinidad area is also provide little bit more flexibility in terms of being able to.

Provide some increased capacity utilization as we execute turnarounds on the island.

Now while these outages did take a little bit longer than expected to complete I'm really happy to be able to share that since returning to the plants back to operation they've been running extremely well.

Finally, I just wanted to come are kind of highlight a couple of other things out across our North American fleet, obviously, excluding where we did the pull forward turnaround yet in borger.

The remainder of our assets in North America ran at a 100% capacity utilization across the quarter and it was really the result of the investments that we've put in terms of reliability in those sites.

As well as completing some de bottlenecks, we did some brownfield debottleneck specifically at our Geismar facility that facility is now running at full capacity at those debottleneck rates.

And then finally really the work that the team has done really to focus in on how do we continue to run our assets efficiently and effectively.

Now as a result of that and Ken alluded to it that really is giving us the confidence as we move into 2024 and as you'll see from our guidance range. We've added almost 500000 tons into our production forecast as we move into 2024.

Your next question comes from the line of Ben Isaksson from Scotiabank. Your line is now open.

Thank you very much and good morning, everyone.

When we look at the retail.

How should we think about crop protection.

Is that a threat or an opportunity can you run through how the challenges have evolved is it.

Region specific as you mentioned in South America is it structural or cyclical that can be cured with inventory destocking should we think about it being more volatile going forward just trying to understand how you see the CP business. Thanks.

Yes. Good morning. Thank you for the question. So we certainly see crop protection as an opportunity and I would say the challenges at the moment are really quite regional as it relates to Brazil, but I'll hand, it over to Jeff to provide some color yes, Ben Thanks for the question when I look at the crop protection.

Business, if I look and Ken mentioned in his commentary we saw we saw a lot of pressure in the fourth quarter as retailers in Brazil continued to liquidate their inventory there we feel like we're in a really good position on inventory going into 'twenty four.

We've talked about it quite a bit we expect to see significant improvement in the back half of the year in the crop protection market in Brazil, If I look at North America, I'm actually quite pleased with where we ended the year from a crop protection margin standpoint, we were just under 25%.

And Thats historically in land, where we are.

Generally old crop protection margin agenda same for Australia. So I'll see you asked the question how do we see it going into 'twenty, but where I see it as an opportunity, particularly from our Brazilian standpoint that we should see a lot of recovery there from a margin standpoint.

And in North America look we're going to we're in really good position from.

From an inventory standpoint, if I look at it year.

Over year inventories were down about $400 million on the crop protection segment. So this gives us a really nice leverage with our suppliers. We were very opportunistic in the fourth quarter on that purchases.

<unk>, which sets us up really well going into 'twenty.

Your next question comes from the line of Jacob bout from CIBC. Your line is now open.

Good morning.

In the past you talked about mid cycle EBITDA kind of seven to seven 5 billion. I think you were you were referring to be able to achieve that by 2027.

A couple of questions here.

Maybe just talk to what pricing looks like today versus what your bid cycle expectations are.

And do you think that.

This is still attainable.

By 2027, just talk through.

What's your expectation on potash volumes would have to be for that to happen.

Speaker Change: Yes. Thank you Jacob for the question. So yes, we do think it's achievable.

It's really going to a few things we talk about returning we're advancing this year toward more normalized normal margins within retail this year.

Speaker Change: Our guidance range, but we would call that in the mid cycle more more close to $1 90 to $2 1 billion coming out of our retail business and that's also leading to the organic growth that we cite.

Speaker Change: Brian <unk>, our network optimization work digital.

Speaker Change: And that gives us confidence in that range. We also talk about the investments that we've made in products. So that we have the ability to add one or 2 million tons.

Speaker Change: Compared to 2023 levels that are going to gives us the confidence in this growing market to deploy those tons and then we also talked about the things that Trevor Williams decided and ongoing investments in Debottlenecking and brownfields that allow us to add millions tons 1 million tons of nitrogen so from a volume perspective.

Speaker Change: Yes.

Speaker Change: Prices.

Speaker Change: I'll hand, it over to Mark to talk about pricing, but.

Mark: What we would see in the mid cycle is certainly pricing a bit above where we see prices today, but mark over to you. Yeah. Thanks, Ken Good morning, Jacob So yeah, I think Ken covered the retail portion of that in the past to mid cycle EBITDA and retailers are all not in the volumes really well so just on price.

Mark: In that scenario on an approximate basis.

Mark: To feed that seven to seven five.

Mark: <unk> of EBITDA, we would call potash in that scenario of about $400 per ton.

Mark: Both globally and within North America within North America, we're quite close to that number today, but internationally, obviously, where we're well below that and so we do have a gap there.

Mark: But with the fundamentals improving that Ken talked about in the time horizon in front of us as demand improves we certainly see a path there.

Mark: I'm a urea standpoint, our assumption is also about $400 a short ton and so again.

Mark: Not that far away from that today and as we look at in season pricing and the strength that we expect in your area. This year.

Mark: We do see positive fundamentals and from an ammonia standpoint.

Mark: Looking at the Tampa benchmark, it's about $500 a ton and again.

Mark: This year, we expect to see a constructive outlook for ammonia some in your volatility, but all of those prices. We continue to believe are quite reasonable and when you go back to our assumptions for why that's the case. It's the factors that we've seen change fundamentally the last few years in terms of inflationary impacts changes in trade flows changes in energy prices all of those.

<unk> feeding into a structurally higher higher fertilizer price deck over time.

Mark: Your next question comes from the line of Andrew Wong from RBC Capital markets. Your line is now open.

Andrew Wong: Hey, good morning, Thanks for taking my question. So just first of all the potash markets.

Andrew Wong: It seemed to have had.

Andrew Wong: It seems like a bit of a slow start.

Andrew Wong: Haunted building looks good and your patents mosaic costs were higher year over year demand Cross sell I guess my question is like what catalysts are we looking for to kind of get the market moving a little bit more here and what's your outlook on prices.

Andrew Wong: And then just secondly on potash production like mosaic announced curtailment at Colonsay would that be something that neutral considers as well just given your outlook versus your operating capacity.

Speaker Change: Thanks, Andrew.

Speaker Change: It over to Mark here to maybe to go market by market.

Mark: And what we're seeing sort of on the ground.

Mark: Certainly as we head into the planting season in the northern hemisphere in the.

Speaker Change: The balance of the world, but.

Mark: In the U S.

Mark: We've talked about the very strong fall application season, and strong prepays heading into the spring planting season actually.

Mark: Jeff and I were talking about strong seed sales as well and so things are pointing to a strong strong year in North America once again, Brazil.

Mark: While it's been some weather challenges there we think we are probably experiencing some seasonal softness in pricing in Q2 Q3.

Mark: We expect that that prices there could be some firming in that part of the world.

Mark: Australia as farmers in good shape at the moment.

Mark: We would say that yields and price for the last few years have been strong, albeit now some risk associated with El Nino So for the markets, where our retail business as we see we see.

Mark: Pretty strong on the ground fundamentals and we are anticipating normal application rates, maybe for the rest of our distribution and market to market I'll hand, it over to Mark.

Mark: Sure. Thanks, Ken Good morning, Andrew.

Mark: Yes, I think as Ken said, we're entering 2024 with potash showing greater price stability attractive pricing levels for growers and really the need to rebuild.

Mark: Inventories and soil potassium levels. After the last two years in a number of key markets and I think an important.

Mark: Factor here is that in 2023, we would estimate that consumption in aggregate for potash across the world was actually <unk>.

Mark: Higher than shipments so that resulted in an aggregate drawdown in inventories in our view. So these factors are support of our expectation for shipment growth to that range of 68 to 71 million tonnes in 2024 that we talked about so when we actually look across most global markets. Today, we do see a general trend of potash inventories.

Mark: And our balanced to tight position the exceptions to that would be Brazil, and China, which both are estimated to have built some inventory on a year over year basis, but that was on the back of extremely strong consumption in record imports in both of those markets in 2023.

Mark: So those are the dynamics that are shaping our view of 2024 demand and we see the strongest growth potential in 2024, and those markets where inventories are historically tight or were below needs applications have lapsed soils mark depleted.

Mark: Those markets, maybe just to dive into it in a little more detail that we would expect to grow which we've provided in our outlook presentation would be southeast Asia, Europe, India, and Latin America outside of Brazil, and really as we've talked about earlier in the call today Southeast Asia is the largest of those in Europe's a meaningful contributor to that is.

Speaker Change: Well, so I think just to reiterate.

Speaker Change: Kind of touch on a few key markets.

Speaker Change: Southeast Asia, we see about $2 million.

Speaker Change: Tons of demand growth at the midpoint that actually wouldn't get us back to historical trend levels and after the last two years of under applications, we see that being.

Speaker Change: Being reasonable and again for the reasons, we talked about supportive and country economic storms.

Speaker Change: While in southeast Asian countries, and rice, the impact of El Nino being less severe than originally spirit and.

Speaker Change: Depleted inventories in that market. So we think theres a good setup there.

Speaker Change: Europe I mentioned is another market, where we see growth.

At our midpoint, we would have about 1 million tons of growth.

Speaker Change: In potash shipments into Europe in 2024, which again would represent a strong year over year improvement, but not a full recovery back to trend levels and for many of the reasons that we just talked about in southeast Asia application rates there have been low for the past two years due to the volatility in prices and actually challenges for supply into the region.

Speaker Change: So it does appear that we're poised for a rebound in in Europe.

Speaker Change: Supportive weather looks like it could set up to an earlier start to spring application in that market.

Speaker Change: Maybe just to turn to to Brazil and China.

Speaker Change: And these are the two markets that really surprised to the upside in the second half of 2023, we saw record imports into both of those markets last year and it's important to note that in both cases consumption was estimated to be extremely strong which was the primary driver behind the large growth in shipments in those markets in 2023.

Speaker Change: If we look at Brazil, we.

Speaker Change: We estimate that inventories entered the year about 700000 tons higher than then they entered 2023 as Ken touched on some poor growing conditions and adverse weather impacted demand and sentiment to start the year, but in recent weeks, we understand that inquiries and buying interest in the country have increased and the expectation is that buyers will be.

Speaker Change: <unk>.

Speaker Change: As we move into Q2 and prepare for the next major <unk>.

Speaker Change: Latching activity in Q3 and that market is supported by attractive prices for distributors and growers, we would expect shipments to be.

Speaker Change: Roughly similar to 2023 in 2024, but we do expect that consumption is going to increase assuming supportive weather.

Speaker Change: In China.

Speaker Change: Imports are anticipated to have reached a record in 2023, we saw extremely strong demand emerge in the second half of 2023 and I think again important is that we would estimate the majority of that increase on a year over year basis went to the ground domestic consumption was estimated to be at record levels and we do we do believe that.

Speaker Change: Chinese inventories were up by about 750000 tons to start the year, but to put that in context.

Speaker Change: We would look at imports being up by $3 7 million tonnes. So again consumption was very strong and we believe there continues to be a strong policy incentives.

Speaker Change: And economics incentive.

Speaker Change: Supporting potash demand in China.

Speaker Change: Given the comfortable inventory levels that we see in that market.

Speaker Change: And the trade flow shifts we've observed over the past 12 months to 18 months, we would expect limited engagement in the near term on a new contract in the midpoint of our shipment and volume guidance doesn't assume an eminent settlement and China. So overall, we would say that Chinese shipments, we expected our midpoint would decline by about 2 million tons in 2024, but.

Speaker Change: We do expect consumption to be strong in that region and then lastly, just to round things out in North America.

Speaker Change: North America like some of the other markets. We've talked about entered 2024 with historically low inventories following very strong demand in both the spring and the fall of 2023, where that product went primarily to the ground.

Speaker Change: And this set us up for what was a very positive response to our <unk> program in the first quarter of 2024 here and we've been very very pleased with what we saw and as a result, we would expect as Ken mentioned in his opening remarks to see stronger domestic shipments in Q1 of 2024 versus Q1 of 2023, so with the <unk>.

Speaker Change: I'll use a potash relative to nitrogen and phosphate at attractive levels combined with solid expectations for U S acreage, we see North America as a constructive backdrop in shipments relatively similar to 2023 and 2024. So we step back from each of these markets and overall, we see a setup for demand to grow again in 2024.

Speaker Change: On a backdrop of more normalized and balanced supply, which should incentivize further recovery and growth in global consumption.

Speaker Change: Great. Thanks, Mark.

Speaker Change: With respect to your second question that Andrew on Curtailments.

Speaker Change: Have sized our network.

Speaker Change: Our 2024 to meet our range our guidance range in other words, our expectation of the needs of our customers.

We will always meet the needs of our customers. So.

Speaker Change: We'll always look at where we planned to land within that range, depending on how the year unfolds and everything that Mark just described.

Speaker Change: We have <unk>.

Speaker Change: Sleep well established channels all over the world. We're in touch with those customers every day and so yes, we will we will set up our network our six mines in a flexible way to meet the needs of our customers and that's based on and reliance on the needs of the grade splits as well, whether it's standard grade markets as Mark just.

Speaker Change: And what's going on in China, or whether it's granular markets in places like Brazil, and North America. So we've got the flexibility to shift back and forth between those two as our customers call for volume, but again, we'll always seek to meet the needs of our customers.

Speaker Change: Your next question comes from the lineup Vincent Andrews from Morgan Stanley. Your line is now open.

Vincent Stephen Andrews: Thank you and good morning, everyone. I'm wondering if you could just speak a little bit more.

Vincent Stephen Andrews: On the potash supply as well as the potash.

Vincent Stephen Andrews: Price outlook.

Vincent Andrews: Outlook.

Vincent Stephen Andrews: All your points are well taken on the demand and shipping side of the equation, but we continue to see potash prices drift.

Vincent Stephen Andrews: Drifting lower in most markets. So what do you think causes the price to start flattening out and is there an opportunity for prices to actually increase.

Vincent Stephen Andrews: In 2024 or should we be anticipating this just to be a year of strong volumes, but.

Vincent Stephen Andrews: This is contained to leak.

Vincent Stephen Andrews: Lower.

Vincent Stephen Andrews: Sure.

Speaker Change: Yes, Thanks, Vincent and yes, we do see.

Speaker Change: <unk> or firming of potash prices and a lot of it has to do with <unk>.

Speaker Change: We estimate that the marginal cost of production for potash is up above $50 and there is inflationary pressures for potash producers, but theres also just increased challenges with logistics.

Speaker Change: Of course, you know what they are whether it's.

Speaker Change: Rail.

Speaker Change: Through Russia, and the North China, where now with some of the challenges shipping through the Red Sea, that's all adding cost and so.

Speaker Change: Again, we look at the cost of <unk>, We said that last time to produce that last time it could be up by about $50. We're also in some markets experiencing some just some seasonal weakness so you've combined the seasonal weakness with.

Speaker Change: The notion that it's just more expensive these days to move potash surround to produce potash surrounded.

Speaker Change: Yes, we do think that there is potential opportunity for some strengthening here in 2024.

Speaker Change: Obviously demand returning this year to trend levels are on trend level of 60% to 71 million tonnes and as we look at how that is going to get supplied its really owing to three parts of the world.

Speaker Change: FSU production wage.

Speaker Change: Those volumes are for the most part back in the market and we expect to some incremental volumes from FSU coming back in in 2024, we expect some additional tons coming out of low switch.

Speaker Change: We've assumed.

Speaker Change: Joining me in the market in 2024, as well and then Theres Canadian perhaps in our own production, which we think is going to make up some of the difference as well. So it's really those three producing regions are going to play the role in meeting demand.

Speaker Change: Increasing demand here in 2024 overall for all those reasons, we call it a relatively balanced and stable market.

Speaker Change: Your next question comes from the line of <unk> <unk> from Wells Fargo. Your line is now open.

Wells Fargo: Thanks, and good morning.

My question is on the Capex reduction this year youre going to be spending.

Wells Fargo: $400 million to $500 million less than 2023.

Wells Fargo: It looks like the bulk of that is going to be cut from the investment for growth Capex. So just wondering.

Speaker Change: What was the.

Speaker Change: Change this year versus last year.

Speaker Change: A function of your budget scheduling for the expansion plans for the mid cycle scenarios.

Speaker Change: Or are you tweaking the budget Dow just to conserve cash and also just going forward is two two to $2 3 billion a good level to think about going forward.

Speaker Change: <unk> environment. Thank you.

Speaker Change: Yes, great. Thanks, Richard.

Speaker Change: So.

Speaker Change: A lot of it has to do with just.

Speaker Change: Ongoing and increasing focus on our high conviction opportunities we've made investments in our wholesale business that provide us with.

Speaker Change: Flexibility in capacity now to meet the needs of customers and to continue to grow and we feel good about that and we continue to target those high conviction.

Speaker Change: <unk> in retail proprietary network optimization digital of course again always looking at it.

Speaker Change: Tuck in opportunities.

Speaker Change: Maybe hand, it over to Pedro just to provide some more color on how we think about capex levels going forward.

Pedro: Yes, I think.

Pedro: Good morning, Richard.

Pedro: I think what we're looking at of course, we kind of have mentioned before there were a few investments in sustaining capital that award related to end of life and we are continuing dose for a couple of years, where we think.

Pedro: Those already kind of baked in into and through this year and we continue with the strategies that can just mentioned in terms of primarily.

Pedro: In retail.

Pedro: One of the uses of our Capex in the past as well has been the expansion of network in Brazil, We decided to put that on pause as we integrate the past acquisitions that we have made as well as the.

Pedro: Further maturing of all the acquisitions, we have made in the U S. Here. So we think that this level of capex.

Pedro: Not only provides us the opportunity to sustain all of our assets and deal with.

Pedro: Some of the end of life situations.

Pedro: I've mentioned before but also gives us the opportunity between invest in critical areas, particularly.

And proprietary products in the future.

Pedro: Your next question comes from the line of Steve Byrne from Bank of America. Your line is now open.

Steve Byrne: Yes, certainly.

Steve Byrne: Get back to Jeff's Hersheys com loan amounts gross margins in crop chems on nearly 25%.

Steve Byrne: Our revenues of crop chems or almost 17 billion I mean, that's.

Steve Byrne: Nearly a core business.

Steve Byrne: And I'm, just curious with respect to those margins what fraction of your crop chemical sales are your.

Steve Byrne: Proprietary brand.

Steve Byrne:

Steve Byrne: And within that.

Steve Byrne: Is there a portion of it that you are starting to get your own registrations were you can import the.

Steve Byrne: The active ingredient.

Steve Byrne: And really have a nice margin on it. So just curious on your outlook for that gross margin in coming years.

Speaker Change: Yes, no. Thank you, Steve and then ill hand, it over to Jeff Tarr see but yes.

Jeff Tarr: We are very pleased with the role that proprietary plays in those margins and that's been growing for us.

Speaker Change: But overall.

Jeff Tarr: For 2024, as we think about that 25% and the split then between.

Jeff Tarr: Criteria in our branded products, yes, Jeff <unk> can certainly provide more color on that.

Jeff Tarr: Yeah, Steve Good morning.

Jeff Tarr: As you know our proprietary business has always been a very strong part of our of our retail.

Jeff Tarr: Business environment.

Jeff Tarr: And from a crop protection stay import we relaunched somewhere between 30% 35%.

Jeff Tarr: From a proprietary line of products versus our branded product line and.

Jeff Tarr: We haven't seen that I mean, we kind of kept that pretty much in line. If you would look if you look back in 2003 and of course, a lot of those products as you would know a lot of those products that are proprietary.

Jeff Tarr: Our level of products land would be products that are off patent or post pad and so if you look at 'twenty three we would've seen a lot of pressure actually in that side of the business, especially rail products like glyphosate, slimfast and eight per watt and clip.

We expect to see a really nice recovery in that area coming back in 'twenty.

Jeff Tarr: And Youre right, we do have a very large crop protection, but we still think that we have we think that we have room for growth.

Jeff Tarr: And that crop protection line, you've heard <unk> heard Pedro mentioned, the importance of our proprietary product business for us and it's a matter of fact in our 24 budgets. We've got about 17% increase in gross margin projected for <unk> 44.

Jeff Tarr: Some of that has come in the crop protection side of the business.

Jeff Tarr: Probably more importantly is what we've planned to do in our crop nutrition and our bio stimulant sector.

Jeff Tarr: Of that business as well, where as Ken said, we've had double digit growth I think crop nutrition were up 10% last year and our bio stimulant business was up over 20% last year. So yes crop protection is very important for us. It's also very important from the standpoint that it is a carrier for <unk>.

Jeff Tarr: Which are higher margin product for us.

Jeff Tarr: We saw just under a 10% increase in net.

Jeff Tarr: And that segment of our business last year as well from a registration standpoint.

Jeff Tarr: We've got some registrations in our portfolio I don't know that we've got a strategy right now greatly increasing those registrations for.

Jeff Tarr: Going forward as you know we worked very closely with the multinationals.

Jeff Tarr: From a lifecycle standpoint, as some of those products start to come out patent then we've got an opportunity to bring those products into our proprietary portfolio.

Okay.

Jeff Tarr: Your next question comes from the line of Jeff Zekauskas from Jpmorgan. Your line is now open.

Jeff Zekauskas: Thanks very much.

Jeff Zekauskas: When logistics costs for shipping potash rise.

Jeff Zekauskas: Okay.

Jeff Zekauskas: <unk> penalized by that.

Speaker Change: That is no.

Jeff Zekauskas: Net.

Jeff Zekauskas: Sure.

Jeff Zekauskas: Profit decrease because you're responsible for their shipping costs.

Jeff Zekauskas: Or do you split it with your customers are where if you had to.

Jeff Zekauskas: Quantify what the effects or what would they be.

Jeff Zekauskas: And secondly.

Jeff Zekauskas: Are you hedged.

Jeff Zekauskas: <unk>.

Jeff Zekauskas: Natural gas prices for the first quarter and for later in the year or now.

Speaker Change: Yeah. Thanks, Jeff so as it relates to logistics costs I'll hand, it over to Jason Newton, but we really think about our business in terms of the cost curve and we think about that on a delivered cost basis.

Jason Newton: Yes commodity space that we're in so yes. It is.

Jason Newton: We'll look at the supply and demand fundamentals and we've talked a lot about that.

Jason Newton: But ultimately you can look at the floor in our industry in this commodity space.

Jason Newton: And again that that last time that needs to get produced.

Jason Newton: That marginal ton and all of that ton include as we think about that on a delivered basis, what's happening with logistics for us, but Jason over to you to provide more color.

Jason Newton: Yes. Thanks, Good morning, Jeff, Yes, when we're looking at logistics costs I would say there is there is short.

Jason Newton: And medium term implications of that and both from a supply and demand.

Jason Newton: And pricing perspective to Ken's point on the cost curve so <unk>.

Jason Newton: Like we're in today, where we're pressing down and certainly in the Asian markets and in Brazil to prices that are near the cost base floor.

Jason Newton: Any increase in the cost of.

Jason Newton: Freight from marginal regions is going to support the cost floor and ultimately provide.

Jason Newton: Support to floor prices.

The other impact that.

Jason Newton: Can see especially as freight rates increase and as we're seeing today with the issues in the Red Sea.

Jason Newton: Differentials change and so it impacts trade flows and we know when fertilizer trade flows are disrupted that tends to tightened supply demand balances. So as we're looking at the flows east west from the Baltic into Southeast Asia. For example, we know those costs have increased and especially from Belarus.

Jason Newton: The cost reduction.

Inland logistics relative to pre sanction levels are significantly higher and we're pressing down toward those costs landed into southeast Asia today.

Speaker Change: Thank you, Jason Yes, with respect to our hedged.

Jason Newton: Hedge position on gas.

Speaker Change: It continues to be the case that we enjoy our cost advantage. When you look at the delta between European gas pricing, which albeit is come off significantly from previous highs today would put it sort of eight to $9, but.

Speaker Change: Back here in North America to the $2 50 that we're paying for natural gas. So again that advantage cost position, given our geography, but in terms of our hedge position, we're laying the hedged at the moment, but I'll turn it over to Pedro yes. Thanks, Jeff.

Pedro: What we do with the hedging we tend to be very.

Pedro: More contractually into hedging so we are looking at to kind of.

Pedro: <unk>.

Pedro: Basically farm up some of our contracts with hedges for the remaining of the year, while we have some firm from commitments and.

Pedro: And taking advantage of the existing low prices in the market.

Pedro: But.

Pedro: We are not adopting multiyear hedge.

Pedro: That's kind of our position on that point. So those are more contractually related for the balance of the year.

Your next question comes from the line of Edlin Rodriguez from Mizuho. Your line is now open.

Edlin Rodriguez: Good morning, Thank you everyone.

Edlin Rodriguez: And then just a quick one on corn prices.

Edlin Rodriguez: In the low $5 is that a is that a concern for the industry in terms of where the farmers will be willing to pay.

Edlin Rodriguez: <unk> realized on prices.

Edlin Rodriguez: The sand that corn price is higher than historical norms, but I also understand its psychological number four kilometers, but how do you think this plays out if corn prices stay at those levels.

Speaker Change: No. Thank you Atlanta for the question.

Speaker Change: Obviously watching corn prices very closely but I'll hand, it over to Jeff <unk>, who can provide some color on your question. Yes. Thanks for the question and look while crop prices have declined.

Jeff: Same side of the sheet input prices have declined as well.

Jeff: And especially as it relates to cord.

Jeff: We're not when I look at it.

Jeff: Number one if you look at the North American market in the U S market most of most of our corn in the Midwest is on a rotational basis.

Jeff: Corn, followed by soybean denotes brokers don't breakout of those rotations.

Jeff: Secondly is theyre planning the best Germplasm and this germplasm takes a lot of horsepower produced type yields that you're able to predict and so when growers commit and if I look at our seat bookings today as Ken mentioned earlier they are very healthy.

Jeff: And broker Stillwater plant to best genetics, the best freight packages.

Jeff: Not going to flip that seed in the ground and not give it to horsepower nutrient it needs to.

Jeff: To produce a full yield coast when you get in these situations like we're in right now with lower prices on it.

Jeff: And without a doubt you will now become fee you have to you have to produce yield in order to make it work and.

Jeff: I think it's pretty reflective as well as we went into our followed by fall fertilizer application was up 15%.

Jeff: Very heavy fall less very strong indication of grower sentiment and what they're thinking and.

Jeff: And our prepaid was very strong as well and a lot of that prepay went toward purchase and fertilizer for 'twenty.

Jeff: So I think once the seeds in the ground robots will be committed to given that all of the inputs. It needs because again, it's going to be really key to produce high yield in this type of environment.

Speaker Change: Operator, we have time for one more question.

Fai Lee: Thank you. Your last question comes from the line of <unk> Lee from <unk>. Your line is now open.

Fai Lee: Hello, Hi team. Thanks for taking my question I would like to ask you.

Fai Lee: If you can be a little bit more specific on supply on potash I was looking.

Fai Lee: At your Q3 press release, and you were mentioning that better as well.

<unk> to be down approximately 4 million tons compared to 2021, and Russia to be down approximately 2 million tons to 2021 for 2023.

Fai Lee: What do you expect for 2024, we expect discounts to be back now to the level of 2021 or actually even above 2021, and do you see where do you see these countries.

Fai Lee: Directing volumes these days thank you.

Speaker Change: Thank you Aaron and yes, so a couple of questions there on on.

Returning to the market and where theyre going.

Speaker Change: We do not see in 2024 volumes out of the FSU returning to 2021 levels fully but certainly for the most part, but I'll hand, it over to Jason to walk through that.

Jason Newton: Sure Good morning Erinn.

Jason Newton: I guess just to start and where we ended up in 2023.

Jason Newton: We.

Jason Newton: We think shipments in 2023 estimate of between 60 768 million tonnes so above the.

Jason Newton: The high end of our previous range and that was.

Jason Newton: Facilitated by higher than expected shipments.

Jason Newton: From from both Russia, and Belarus, both still down so Russia down close to 2 million tons in 2023 compared to 2021 levels and in Bellevue is still.

Jason Newton: Down in the range of 3 million tons versus 2021.

Jason Newton: For the region as a whole we would expect somewhere in the range of $1 million of half.

Jason Newton: Tons of additional production.

Jason Newton: In 2024 versus 2023, so for both Russia.

Jason Newton: <unk> dollar is not back to 2021 levels, but again, we've seen relatively stable shipments from those regions since late 2023.

Jason Newton: There are no further questions at this time I will now turn the call back to Jeff Holtzman for closing remarks.

Jeff Holtzman: Okay. Thank you for joining us today, the Investor Relations team is available if anyone has follow up questions have a great day.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.