Tim Glenn: Yes. Thanks, Chuck, and good morning, Frank. So yes, I mean, you go back to kind of the backdrop heading into the season, we saw a pretty significant rapid decline in the commodity prices that was a result of the big yields and the resulting high carryover stocks from the last safrinha season. And then when you couple that with the, I would describe as highly variable weather conditions that really delayed the start of the soy planting season in the key markets across the marketplace in Brazil. And in some cases, that was drought or lack of moisture early on or in some places, it was excessive moisture as you went further into the South. And what it ended up doing was pushing a significant share of the soy into later planning window that really impacts the ability of the farmer to follow up with a corn crop that falls into an ideal planting window.
So as you said, we talked about that in November, and we were sort of at that call it at that critical point when we needed to get that crop planted. And my best guess is somewhere around 20%, 25% of the corn — or excuse me, of the soybeans were planted in a window that was not ideal for following up with corn. And I’m not going to try to peg how much corn won’t be planted at this point in time. I spent a lot of time in the marketplace over the last three months, traveling across the major safrinha growing areas, discussions with customers and channel partners and certainly, a lot of feedback from our frontline commercial team there. But as we sit here today, we believe it will be somewhere, call it, a double-digit reduction in terms of the area that’s planted to corn for both the safrinha and the summer season that has already been planted.
That being said, farmers are still planting corn hectares where the timing works out. And last week, I was in Brazil, and I saw it firsthand where they were harvesting beans and coming right in with corn. So, the momentum is still there for corn and a lot of support even with the reduced commodity price. And our expectation is, as Chuck just said, that we’re going to see something more back to a typical level of corn planting as we go into next year, where I think of something on the order of the safrinha hectares for 2022 and 2023 being a reasonable target for the 2024-2025 crop that will be important in the second half of next year. Corn remains a profitable crop. Demand for rain in Brazil is still growing. And so that’s very important. And the other thing that we’ve seen is that there’s a real strong agronomic reason to plant corn and the soy that is being harvested right now that followed corn from last year is performing better than those that were not on rotated acres from corn.
So, we’re still very optimistic and the fundamentals remain strong, but it is a really challenging safrinha season in Brazil. So, I’ll pass it over to Robert for CP.
Robert King: Yes, Frank, when we began to look at or unpack a little bit more of Brazil, what’s going on there, I think it’s fundamental to reflect on what Chuck said. Brazil will get back to growth. It’s just going to take a little bit of time. From looking at 2024, this destocking is going to last a little bit longer. We need to work through the first part of the year to have a little better view. But overall, this next year, we see the industry down in low single-digits overall, but we expect to be up modestly, primarily due to further penetration of our new products, the differentiated products, and then adding in Biologicals there. Specific to your question, though, around generics and the pressure there of pricing and competitive environment.
Off-patent and generics have always been part of this market overall in the global market. It is a little bit stronger in Latin America and in Asia, but we’ve not seen any further pricing degradation coming out of the generic manufacturers. Production capacity, we’ve not seen any significant changes there either. However, there have been some plants built of late that are focusing on big molecules that are coming off patent in the next few years that will play a factor there, none of which are any of our molecules. In the last half of 2023, Brazil imports began to slow overall. And we continue to see that the generic profits are struggling in this low pricing environment. So, we expect that there will be some changes there as we walk through this year and next year.
Specific to the pricing pressure, yes, it is exasperated a little bit in Brazil due to the former profit environment and the macroeconomic factors that Chuck mentioned there earlier. What this does is farmers begin to look at what are the next best alternative to save on the input cost. But our strategy that focus on the higher value, the differentiated products and the higher service is one that we think is still a winning combination. These high-technology products and high-quality agronomic service being excellent in these areas is things that will differentiate us from the competition. And we think we’re in a pretty good position as we head into 2024 and then 2025 with our strategy in those areas. So thank you.
Operator: We’ll go next to Steve Byrne from Bank of America.
Steve Byrne: Yes, thank you. I assume your Seed order book for North America is full at this point. And just wanted to ask your view on within that, how much of an increase in Enlist are you expecting as a percent of soybeans for 2024? And can you partition that $100 million reduction in net royalty into the buckets. How much of it is trade fee versus germplasm fee, both out-licensing and in-licensing. Those are four buckets there. And can you split that $100 million, and do you see any risk of Seed pricing going into the spring with potential competitive actions?
Tim Glenn: All right, Steve. Hey, good morning. I’ll take a shot at all those. It’s — we’re going little bit of time on North America Seed here. So I’d say where we’re at right now, you touched on it. I mean, we’ve been live in the market since August 1st, and we spend that August-December window, working closely with customers, building proposals and securing commitments, and we feel very good about where our order book sits today. And I’d say pattern — order pattern in terms of timing was consistent with past experiences and our expectations, and we’re not seeing any change in terms of the mix of technology. And so that feels like a good spot rate there. In terms of the question on pricing, it’s always a competitive marketplace.
