Juan Luciano: Yes. Thank you. Good questions. So, on the short-term part of the question, we see China will continue to increase imports. If you look at domestic grain prices are at historically high levels, especially now that we are €“ that they are reopening. Of course, a reopening of China could be a game changer for a variety of commodities, not just grains. We look at domestic vegetable oil stocks have been at relatively low levels. And we have seen, during the second half of 2022, an increase in domestic pork prices since, I would say, last spring. So, that prompted farmers to increase their herd. So, we see that demand in the short-term. But again, I think the variability here may be on the upside on how much of the reopening is bringing people to consumption.
Of course, people have been in lockdown almost for 2 years in China. And there is a €“ you are going to find the same pent-up demand that we saw ourselves maybe since last year when everybody came out of COVID. So, I think at this point in time, short-term, China will be probably a positive upside, if anything, to our forecast. When you look at the long-term and the demographics of China that you described, probably about 50% of the Chinese population is middle class or what you will consider middle class, and they are in this process of increasing their protein consumption. But still historically, if you look at what the U.S., we consume about 270 pounds per year of proteins. China is at the 170 pounds per year level. So, they are still far from our level of consumption.
And again, if you look at our lifestyles are converging slowly. So, you will expect their protein per capita consumption to grow significantly during this period. The other thing you need to remember is that we are still going to be 10 billion people in the planet by 2050, which is one of the issues that serves our €“ or drives our purpose, which is trying to increase the carrying capacity of the planet, trying to feed all that. And whether it’s in China or whether it’s in Africa or whether it’s in Southeast Asia, we are a global company, we have a global footprint, and you have seen us continue to expand our destination marketing footprint to serve customers around the world. So, we will serve €“ we will serve the feeding of growing population of the world, whether it’s in China or somewhere else.
But as I said, I don’t expect China to have a decline in the next probably two decades in terms of their demand for protein consumption.
Operator: The next question today comes from the line of Robert Moskow from Credit Suisse. Please go ahead. Your line is now open.
Robert Moskow: Hi. Thank you. I was hoping to get a little more detail on your forward outlook for ASO. In the slides in the pack, you indicated that the front month board crush is at $75 a ton, and that’s lower than where it was on your third quarter growth . Does that influence your outlook for forward crush and the fact that it’s come down a bit? And how can I relate that to what happened in calendar €˜22?
Juan Luciano: Yes. Rob, I couldn’t hear you very well, but I get the gist of the question. So, listen, I think at this point in time €“ and as I said before, we have visibility for probably the first quarter and big part of the first half, 2023 will be another strong year for crush, certainly above the long-term guidance that we provided at our global Investor Day. We also are planning to have an improvement in our process volumes that given some of the operational resilience initiatives. And we are going to have Spiritwood online in Q4. And hopefully, by in a couple of €“ maybe in a couple of weeks and a month, we will resume crush in Paraguay. We continue to have good crush margins in Europe. Certainly, Europe will be helped by the small crop in Argentina.
Also, I think energy prices have moderated a little bit in Europe given the warm summer. So, we are also shifting in Europe as much to soybean crush as we can as there is margin there. We are also going to have this year that we didn’t have last year, better canola margins. Canola crush margins certainly and now that we have a Canadian crop, are more in the $120 to $140 per ton in North America, maybe $70 to $75 in Europe. So, I would say, we are having good crush rates. We are having good mill export demand in the U.S. We are having very strong soybean oil demand here in the U.S. So, I will say, in general, we don’t see any clouds in the horizon for crush. The crush business will have a very strong year in 2023. As I have said before, Rob, I wouldn’t pinpoint a specific number given the China reopening, given the issues in Ukraine that whether it’s not driving crush margins that may drive energy prices.
And certainly, the crops, we are expecting that Brazil needs to have a big crop that will offset the decline in Argentina. And we hope that the U.S. will have a big crop as well, but we still need to go through the weather in both instances. So, again, I will just reiterate a very strong environment for crush as far as we can see.
Operator: The next question today comes from the line of Eric Larson from Seaport Global Securities. Please go ahead. Your line is now open.
Eric Larson: Yes. Thanks. Thank you and congratulations on a great year, everyone.
Juan Luciano: Thank you.
Eric Larson: So, yes, my question comes down to, we have talked a lot about the bean markets globally and domestically here. But one of the big kind of hangovers right now in the grain market is corn demand. And obviously, I think Brazil is going to be running out of corn here pretty quickly. We may have seen some new Chinese demand coming in here for corn. But how do you look at €“ and we have been on competitive, I think just from a currency basis €“ from everything else. But could you talk a little bit, Juan, about the corn market and how you see the export situation with that particular commodity?
Juan Luciano: Yes. I think you called it well. I think that when we had the low water levels in the Q4 that hurt us, of course, we lost some bean business. But the corn business basically is going to be with us until the crop in Brazil €“ the harvest in Brazil comes, so it’s like middle of the year. So, we see that as a very strong business in Ag services for North America. We also have, unfortunately, I think Ukraine Grain Association has come up with a statement that they don’t believe corn for €˜23 will exceed 18 million tons, which is a far cry from the 29 million tons or 30 million tons that they used to produce or we expected. So, demand continues to be solid out there. And we still €“ as a world, we need Brazil to have a good crop.
Of course, if there are rains and delay a little bit the harvest of soybeans, that may delay a little bit the planting of the next crop. But we hope that in your farm and everybody’s farm, corn is growing strongly because we need it. And again, the U.S. will be exporting a lot of that from here until probably July.
Operator: The final question today comes from the line of Steve Byrne from Bank of America. Please go ahead. Your line is now open.
Steve Byrne: Yes. Thanks. Just wanted to ask about the press release that was out a couple of days ago about the new biostimulant of ADM released, the data for rating sold. And I know that you do have a business where you work with farmers to provide them fertilizers, etcetera. But I think this seems to be the first time that you are actually rolling out one of your own proprietary products. So, I am just trying to understand a little bit about your strategy here. Will you invest more in products for nutrition and crop protection, especially biologicals? And what do you think is the potential market and actually the earnings potential for ADM?
