Gregory Heckman: Sure. If you look at China, crush margins have been volatile all year there. It’s very spot. But our team has done a fantastic job. We’ve had a very good year in China, a better year than last year. And Q3, we actually a great coordination between our industrial and commercial logistics team ran record volumes for us. And so annual numbers continue to hold in China. So while continue to be very spot, it looks like some of that will carry into Q4. We talked about Argentina. Of course, you’ve got about zero farmer selling right now there. So until we get to new crop. Argentina continues to be a nonevent, very tough situation. And then we’ve seen margins improve in Brazil, and that’s really good global demand and the back end of what was that record crop.
Now the farmer has been a little sporadic on old crop selling South American farmers were watching and the weather situation developed in North America to ensure that there was going to be a crop there. But then as that crop kind of came home in North America, then we saw some better selling and new crop selling has been pretty slow. So that will be the keys to watch there as well. In Brazil, I think long-term, we switched in April from B10 to B12 and then each year we’ll add 1% demand. So we’re starting to feel that as well. And then look, North America, there’s definitely been a lot of volatility in the crush margins, and we’ve seen that in oil as we’ve added this energy demand. That oil pipeline is pretty sensitive, right? We’ve seen it kind of draw down stocks and get pretty tight.
We’ve seen it loosen up what people had opportunities running. And I think that will continue to be that way. But there is strong oil demand, and now we’re seeing the meal demand start to return, and that’s really to serve the rest of the world with meal not coming out of Argentina. And then if you look at soft margins, they really remained good globally, and that’s the strong oil demand, and it’s also been good seat supply, if you look in Europe and some of that’s Ukraine where you’re seeing switch to Sunseed at the expense of corn or if you look in Canada, where we’ve seen the canola crop get a little bigger than anyone expected and production has been better there. So that’s been supportive as well.
Salvator Tiano: Thank you very much.
Gregory Heckman: Thanks.
Operator: Thank you. The next question comes from Thomas Palmer with JPMorgan. Please go ahead.
Thomas Palmer: Good morning. And thanks for the question.
Gregory Heckman: Good morning.
Thomas Palmer: Maybe I’ll follow-up on soybean oil and kind of what you’re seeing. I know you just referenced it, but we have seen some pricing weakness as we look out over the past month or two in the U.S. Do you think this is, is anything in terms of eroding demand? Is it more a supply driven? And kind of how do you see this playing out over the next couple of quarters or so? Because it did sound like you’re pretty positive on overall demand picture, but at least what we’re seeing in pricing would suggest some degree of imbalance?
Gregory Heckman: Yes. As we said, I think the long-term fundamental drivers there of more demand. Food has held in there. In fuel, we know that demand is going to grow as we see R&D projects continue to come online. It will be a little choppy depending on how things are running. Crush is running hard. We’ve got some new crush coming online and the market will have to do some adjustment. But global stocks of oil are fairly balanced. If you look palm still from a production on how is producing probably going to get tighter in first half and tighten up the global oil situation. And the nearby softness, some of that was driven around RINs in that, and then the meal demand stepped in. And so they will continue to be a bit of a battle on whether meal or oil is going to carry the crush. I don’t think it’s going to be a straight line to either one as we move forward.
Thomas Palmer: Thanks for that. And then just on the M&A side, you do have in your presentation, the reference to smaller scale M&A. Just any update in terms of businesses or assets that might make sense, areas of your business. And then what are you seeing in terms of seller expectations? Do you think they appropriately reflect market conditions in the interest rate environment?
Gregory Heckman: Well, I’d just say, look, we’re going to stay really disciplined, right? And we’re so not going to do anything that would create any slowdown or conflict to get the Viterra deal closed and through the regulatory process. So that’s number one. But otherwise, our targets continue to be in those areas where we need to fill in some strengths where we see the long-term growth and where we have a right to win. And that’s why CJ Selecta was a great example. It’s been a target for years. And quite frankly, it’s how we think about things. Our team, we’re constantly updating and challenging our list and developing those relationships. That when those right assets do come available at the right price, we want to do those deals. And we’ve had a chance to do deals along the way that weren’t at the right price, and we’ve stayed patient and we will continue to be disciplined, and then do them when they’re available at the right price.
Thomas Palmer: Okay. Thanks guys.
Operator: Thank you. The next question comes from Sam Margolin with Wolfe Research. Please go ahead.
Sam Margolin: Good morning. Thank you for taking the question.
Gregory Heckman: Good morning, Sam.
John Neppl: Hi, Sam.
Sam Margolin: I want to go back to Viterra, if I could, to start in the grains market. You said, you mentioned that there’s some opportunities right now. I think you’re maybe referring to like market structure of corn. It’s pretty significantly in contango. And it seems like Viterra has an opportunity to generate a lot of cash between now and when the deal closes and might be material to their capital structure at the time of the close. And I wonder if you can talk about whether Viterra’s operations within this dynamic are part of your conversations with them as you talk about the merger that you referenced. Thanks.
Gregory Heckman: Yes. Yes. Unfortunately, we still have to operate separately until we can get the deal closed. So we continue to be competitors. But when we did talk about the combination as we think about the future, when we get the opportunity to run these business together, one of the things we’re most excited about, right, is that our assets are in different places. And our strengths being processing and then there’s being origination in handling and storage and distribution is a great offset. And I think you’ve called out exactly right, part of the diversification that comes in that combination is with all their storage when you get into a carrier contango, it’s definitely good for their system, and that’s part of the diversification that we’ll get with that combination. So yes, the big crops definitely should be good for their system looking outside in here.
Sam Margolin: Okay. Sorry, that was a little bit of a tough one. This one might be more straightforward. You could probably sense that there’s a lot of attention and maybe even investor anxiety just around board crush and the volatility. I mean board crush is always volatile, right? Sometimes it’s higher than it is now. But recently, when it has been, it’s sort of in a really deep backwardation. And now the crush curve is actually pretty stable, and that seems like it might be kind of a better operating environment for you as opposed to kind of a really high front month crush and then and then lower out on the curve. I mean can you talk about how market structure might be influencing your outlook for crush here and some of your earlier comments? Thanks.
Gregory Heckman: Yes, Sam, there’s probably two things to think about. One, the ag markets and the crush in the curve, the most liquidity is always in the first 90 days, the first quarter and then the second quarter out, some of that visibility in liquidity is there, but not as much, and that’s kind of historical with these markets. So yes, when the market is such that we’re getting more signals, there’s more liquidity and more visibility a little farther out. That’s a better operating environment. Now the other I would say is the board crush is part of the calculation, of course, the cash crush ultimately is what — how we execute each of those legs in the cash market. It’s ultimately the money that we bring to the bottom line for all of our stakeholders.
