And I’d say this year, I’d say soybeans are probably a little bit more competitive than maybe on the corn side and a lot of hooks battling for the spots there. But as we sit here today, and we’re roughly 70 days out from the planting window opening in the heart of the corn belt. Our prices are holding and we feel good about where we sit there. Customers understand the value proposition, and our team is focused on staying close and executing our plan. And so you never know what’s going to happen, as I said, 70 days until the season really breaks here. But I think we’re in a positive spot in terms of, call it, the stability around price. When you get into E3, I’d say where we sit today, order position is tracking as expected and our best estimate in terms of the market right now is about 60%.
We see the soy market at about 60% converted to E3 this year. And again, remember, we don’t have full visibility to our licensees and there’s over 100 other companies that are selling Enlist E3 soybeans. And so we don’t have perfect visibility there, but I think that 60% level is confident. So no surprises and things are tracking as expected. In terms of that royalty bucket, I’d say this year, and I don’t know if I can split it into four, I probably won’t try to. But the majority of the benefit that we’re getting this year would be from reduced payment of royalties, primarily in soybeans. So that’s the — think of that as the primary bucket. I think as maybe Chuck had said earlier in his comments, we’re going to see that transition, especially beginning in 2025 and beyond where royalties and the benefit from royalties will be greater than what the benefit is from reduction of royalties paid.
So a pretty significant — that will be a significant milestone as we transition there. So I think I touched on all your points there.
Operator: Thank you. We’ll go next to Adam Samuelson from Goldman Sachs.
Adam Samuelson: Yes. Thank you. Good morning, everyone. I was hoping to maybe just get a little bit more color on the free cash flow outlook, both the out performance in the fourth quarter as well as kind of the cadence in 2024. How do we think about the normalization in crop protection production, which will — should your payables balance increase? How — just how is that working capital kind of inflection maybe work through the year and any differences you would call out in working capital trends between Seed and Crop Protection because, obviously, there’s very divergent trends happening in those two businesses?
Dave Anderson: Sure, Adam. This is Dave. So as you know, in 2023, we benefited. We had a strong finish, particularly in receivables and also advanced payments, which, by the way, really underscores the health of the US farmer in terms of income as well as their liquidity. So we had strength in terms of collections, which really enabled us to achieve that round number of $1.2 billion in terms of cash flow for 2023. For 2024, what our guide includes is continued progress in working capital. Notably, though, the mix is going to be a little different. We had accounts receivable in terms of the change of change and the same with inventories were positive in 2023 and significant payables was a use net for the reason you cited in terms of just the reduced procurement, particularly in the Crop Protection side related to managing inventories.
For 2024, we’re going to see receivables and payables, both being again, change of the change, being contributors in terms of cash and receivables is going to go the other way. We’ve got a little moderation assumed in terms of the cash to credit ratio for the collections at year-end. And we’ve got just with some of the market conditions we think DSO is going to go up on a year-over-year basis, modestly still very healthy on a year-over-year basis. But that’s essentially, that mix shift in working capital, but an overall theme is overall continued benefit from working capital in terms of cash contribution in 2024. So we’re excited to be at near 50% conversion in terms of the guide that we’re giving you, precise numbers more like 49%, but round numbers, 50% conversion cash flow to EBITDA for 2024.
Operator: Thank you. We’ll go next to Aleksey Yefremov form KeyBanc Capital Markets.
Aleksey Yefremov: Thanks. Good morning, everyone. Last quarter, you discussed an influx of generic crop protection imports into Latin America. Has situation changed at all in — over the fourth quarter?
Chuck Magro: Yes. So I think Robert covered some of this already. Good morning. I’d say, look, what we saw in the third quarter was elevated imports from broadly speaking, from generics entering Latin America. What we’ve seen since then as we work our way through the fourth quarter and then so far in 2024, is that, generally speaking, imports into Latin America are down and they’re trending — they’re slowing down, they’re trending down, and that includes generics. So I think we commented that what we’re seeing at a price level is that we didn’t expect that what we saw at, I’ll call it, the peak was sustainable. And that’s exactly what we think is happening here is there is a rebalancing happening, I think there’s kind of a view of that you need to be profitable when you’re moving these products around the world and into these regions.
And so that’s exactly what we saw is a slowdown. But I will counsel — generics a part of this market. They’re not going away. They serve a role, but it’s not the primary area. In fact, we’ve made portfolio decisions to move almost our entire portfolio away from these product lines, because we feel that where we want to add value is differentiated technology service with strong agronomic support, because I think that’s what farmers need and they’re willing to pay for that. But to answer your direct question, yes, we’ve seen a slowdown in imports into Brazil, including generics.
