Steven Haynes: Okay. And then maybe just another quick follow up on the back half and what you’re kind of assuming for the size of the U.S. crop and how to think about maybe what some of the different scenarios are there. I think you alluded to 4Q being a little bit better because of the U.S. crop, but maybe if we have a larger than expected crop in the back half, what do you think that would mean for the outlook that you’ve currently laid out? Thank you.
Gregory Heckman: Yes, I’d say if you look kind of at a high level, right. We got the Brazil crop coming in probably the bean production being in the mid-150s and that’s versus last year we were around 160 million metric tons. I mentioned Argentina bean production will be around 50 million tons there, which is about double what it was last year. And then I think as that sorts out and the market sends the right signals, we’ll see how the acres work here in North America. Right. And how many bean acres that we end up with and how the growing season plays itself out. But we do need to have a good growing season here in North America, but have no reason right now to plan on anything else.
Steven Haynes: Thank you.
Operator: The next question is from Salvator Tiano of Bank of America.
Salvator Tiano: Yes, thank you very much. So the first question I want to ask is specifically about the guidance. And I know you mentioned many times the forward curves in most cases are inverted for crash margins. And I understand that’s how you give the outlook. But let’s say we’re sitting here three – from six months from now and would you expect the crash margins to indeed be that low? As you said, liquidity is limited, kind of on the forward curve. So is there a chance that simply things will revert and the outlook for the year may be better?
Gregory Heckman: Well, I think that’s why we’ve been consistent about using the forward curves and what we currently see in the environment when we do give the outlook, because that way it kind of doesn’t flop around depending on our forecasting of what we see in the markets versus what the public forecasters are saying they see in the market. But that’s why I do think those flags that we’ve called out, right, weather is always key, how that farmer is going to market the marketing pattern and how much on farm storage that they’ve got to affect that and how their financial condition is from a liquidity standpoint. And then the big demand drivers, right, as we talked about, how quickly does demand bounce back on the food side, which is the one we can see snap back pretty quickly.
And on feed, it looks like animal numbers roughly flat. Chicken is probably up a little bit, pork might be down a little bit globally, but so the animals are still in place. And how quick do they add animals from a demand standpoint, as that profitability has returned in the animal sector? I think they’ve seen the worst on their profitability as an industry. And then this veg oil market is pretty sensitive. If you look globally, palm is not increasing at the production growth that it had historically and at the same time, they’re adding domestic biofuel demand globally on the palm side. So oil tightening up somewhat from a global perspective, while you are growing biofuels in general, renewable diesel specifically, and SAF kind of to come in the future.
So you’ve got a new industry that’s trying to decarbonize its liquid fuels, because we can do that with vegetable oils, low CI feedstocks, and help them do it at scale. And the market’s been sending that signal that we can supply those feedstocks and we’ve seen quite a bit of demand that will be coming on in that segment. And so that oil leg can really affect the crush and that’s why we call that flag out. And that’ll be a key one to watch as well. So should be a really interesting 12, 18 month kind of transition here, not only on the crops, but as demand continues to grow as well, and as customers kind of move back to trying to drive growth versus cost savings.
Salvator Tiano: Okay, perfect. The second question is on merchandising specifically. I guess in Q2, Q3 it was kind of a wash when you consider the $75 to $100 million EBIT you’ve given in normalized earnings. But Q4 was well below that. Would you say now we’re in an environment on the x-cycle where merchandising will actually be below that normalized level, or are we still mid cycle? And Q4 was just an anomaly.
Gregory Heckman: Yes. So I think we call merch to be slightly down here in ’24 versus ’23. And right now, that’s probably got it slightly below where we’re at in our baseline model. But again, merchandising is toughest one to forecast and is the first one to react. If we get some policy changes that affect flows and or any weather issues that affect production, and I’ll tell you, as we continue to grow more yield on the same amount of acres and we’re seeing more volatile weather patterns, both dry and wet, that affect production and logistics, that probably just long term leads to more volatility. So the merchandising will be the one that absorbs that on the short term changes.
Salvator Tiano: Thank you very much.
Gregory Heckman: Thank you.
Operator: The next question is from Thomas Palmer with Citi.
Thomas Palmer: Good morning. Thanks for the question.
Gregory Heckman: Good morning Tom.
