Nutrien Ltd. (NYSE:NTR) Q4 2023 Earnings Call Transcript

Nutrien Ltd. (NYSE:NTR) Q4 2023 Earnings Call Transcript February 22, 2024

Nutrien Ltd. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings and welcome to Nutrien’s 2023 Fourth Quarter Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow after the formal presentation. As a reminder, this conference call is being recorded. I would now like to turn the conference call over to Jeff Holzman, Vice President of Investor Relations. Please go ahead.

Jeff Holzman: Thank you. operator good morning and welcome to Nutrien’s fourth quarter 2023 earnings call. As we conduct this call, various statements that we make about future expectations, plans, and prospects contain forward-looking information. Certain material assumptions were applied in making these conclusions and forecasts. Therefore, actual results could differ materially from those contained in our forward-looking information. Additional information about these factors and assumptions are contained in our quarterly report to shareholders as well as our most recent Annual Report, MD&A, and Annual Information Form filed with Canadian and U.S. Securities Commissions. I will now turn the call over to Ken Seitz, President and CEO, and Pedro Farah, our CFO, for opening comments before we take your questions.

Ken Seitz: Good morning. Thank you for joining us today as we recap our 2023 results and provide an outlook for the business and our strategic priorities for the year ahead. Nutrien delivered adjusted EBITDA of $6.1 billion in 2023, we generated $5.1 billion in cash from operations supported by the countercyclical release of working capital and retail. In response to changing market conditions, we took several actions during the year to enhance free cash flow, including a reduction in planned capital and operating expenditures of approximately $400 million. We maintained a balanced approach to capital allocation investing to sustain and grow our assets and returning a total of $2.1 billion to shareholders through dividends and share buybacks.

As the year progressed, we saw increased market stability and strong fertilizer demand in North America, supported by improved grower affordability and extended fall application season, and low channel inventories. Demand in key offshore markets also increased in the second half. However, the level of market stabilization varied by product and geography. Crop nutrients sales volumes for our global retail business increased by 10% in 2023 as growers worked to replenish nutrients in the soil. Due to the strength of grower demand in all regions, we ended the year with retail fertilizer inventories down 10% compared to the prior year. Crop protection sales volumes and margins in North America returned to normalized levels in the later part of the year, and we continued to be opportunistic in our approach to restocking inventories.

In Brazil, we significantly reduced our crop protection inventories in the fourth quarter, but margins remained challenged due to the persistence of higher inventory in the channel. For the full year Nutrien Ag Solutions delivered adjusted EBITDA of $1.5 billion, down from the record prior year and well below the level we would view as normalized earnings. We tightly managed inventory and advance a number of strategic initiatives that position our retail business for growth in 2024 and beyond. One of the areas of growth is our proprietary products portfolio. In 2023 these high-value products contributed gross margin of $1 billion, including increased sales and margins from our proprietary plant nutritional and biosimulant product lines. Gross margin for our crop nutritional products has grown at an annual rate of 15% over the last five years and we plan to continue to invest in our supply capabilities through differentiated product offerings and expanded manufacturing capacity.

We completed a number of tuck-in acquisitions in 2023 and will pursue targeted opportunities in our core markets going forward. As it relates to Brazil, the long-term prospects for agriculture are positive and it remains an important crop input market for Nutrien. In the near term, our focus will continue to be on the integration of recent acquisitions and optimizing our cost structure in this market. In potash, we delivered adjusted EBITDA of $2.4 billion in 2023, down from the prior year’s record due to lower realized prices. North American sales volumes increased significantly in the second half of the year, supported by low channel inventories and a strong fall application season. We utilized our network flexibility to increase granular potash production and position product across our distribution channel in anticipation of higher seasonal demand and prices in North America.

Our offshore potash sales volumes also increased in the second half of 2023, driven by stronger demand in Brazil and China while net realized prices were impacted by lower global benchmarks and higher logistics costs associated with outages at Campa Texas export terminals. Our potash controllable cash cost of $58 per ton was flat year-over-year, demonstrating our focus on maintaining a low-cost position. We advanced mine automation products that enhance productivity and safety, increasing our annual potash ore tons cut using autonomous mining technology by 40% in 2023. Turning to nitrogen, we generated $1.9 billion in adjusted EBITDA in 2023 as lower benchmark prices more than offset lower natural gas costs compared to the prior year. We completed major maintenance turnarounds at our Geismyran and Borger plants in the second half and initiated actions at our Trinidad facility that are expected to support higher operating rates going forward.

We completed our Phase 1 GHG abatement program in 2023, which will be a key contributor to reducing Greenhouse gas emissions. This included a carbon capture project at Redwater that increased our low-carbon ammonia production capability to 1.2 million tons. In phosphate, we delivered full-year adjusted EBITDA of $470 million and focused on operational efficiency and product mix opportunities that enhance margins and cash flow. We completed maintenance turnarounds at our Aurora and White Springs plants that enabled higher operating rates in the second half and are expected to support increased volumes in 2024. To summarize, following a period of unprecedented market volatility, we are encouraged by the increased market stability and recovery in demand that occurred in the second half of 2023.

During this time, we focused on initiatives that strengthened our core business, maintained the low-cost position and reliability of our assets, and positioned the company for growth in the years ahead. Now, turning to the outlook for 2024, global grain stocks to use ratios remain historically low as tightening supplies of wheat and rice have offset increased corn production in the U.S. and Brazil. Crop prices have declined from the historically elevated levels in 2022, but lower input prices have resulted in improved demand. In North America, we witnessed the strength of fertilizer demand during the fall season and it has carried through to healthy grower prepay commitments and a strong seed order book for Spring planting in 2024. In Brazil, there is some uncertainty over Safarina corn plantings in 2024.

However, soybean acreage is projected to expand and we anticipate seasonal strength and fertilizer imports during the second and third quarters. For potash, we expect global demand will continue to recover towards trend levels in 2024 with shipments projected between 68 to 71 million tons. In North America, we are seeing strong potash demand ahead of the Spring application season as channel inventories were tight to start the year. We expect increased potash demand in Southeast Asia, driven by lower inventory levels and favorable economics for palm oil and rice. China’s potash consumption was estimated at a record of approximately 17 million tons in 2023 supported by strong affordability and is a part of a long-term strategy to increase domestic food production.

In 2024 we expect lower potash imports in China compared to the record in 2023, but for consumption to remain historically strong. Global nitrogen markets continued to be impacted by regional supply constraints, changes in natural gas prices, and seasonal buying patterns. These impacts have been evident to the first quarter as ammonia prices have seasonally weakened while global urea values have strengthened in response to increased demand ahead of the spring season. The U.S. nitrogen market is currently tight and net import volumes were down significantly through the first half of the fertilizer year. North American Natural gas prices remain very competitive compared to Europe and Asia and we are well-positioned to supply our customers this spring.

I will now turn it over to Pedro to provide more detail on our guidance, assumptions, and capital allocation plans for 2024.

Pedro Farah: Thanks, Ken. As disclosed in our earnings release, we have revised our guidance practice in 2024 to focus on providing forward-looking estimates that we believe are of value to our shareholders and are less impacted by changes in fertilizer commodity prices. We continue to provide guidance for retail adjusted EBITDA, fertilizer sales volumes, key financial modeling, variables, and pricing sensitivities. We have also provided adjusted EBITDA scenarios for our fertilizer business in our earnings presentation posted on our website. For retail, our full-year adjusted EBITDA guidance is $1.65 billion to $1.85 billion. The midpoint of this range represents an increase of approximately $300 million compared to last year, driven by increased gross margins in all major product lines.

We expect crop nutrient gross margins will be supported by higher sales volumes and per ton margins, in particular, compared to the compressed levels in the first half of the prior year. Further underpinning this growth is the continued expansion of our proprietary nutritional and bio-stimulant product lines. In Brazil, we expect increased crop input sales volumes in 2024 and an improvement in crop protection margins in the second half of the year. Our annual potash sales volume guidance of 13 tons to 13.8 tons assumes demand growth in offshore markets and a return to more normal operations at Canpotex ports in 2024. In North America, based on strong participation now our winter fuel program, we expect higher first quarter sales volumes compared to the prior year and a typical pricing reset compared to the fourth quarter of 2023.

Mine automation and other efficiency-related initiatives are expected to keep our potash controllable cash costs of production similar to last year. Nitrogen sales volumes are projected to increase by approximately 500,000 tons at the midpoint of our guidance range, supported by higher operating rates at our U.S. and Trinidad plants. We assume Henry Hub natural gas prices will average around 2.5 per MMBtu and our Alberta nitrogen plants will benefit from the typical discount to Henry Hub. Total planned capital expenditures of $2.2 billion to $2.3 billion is down approximately $400 million compared to 2023. This includes approximately $500 million of investing capital on initiatives that drive organic growth in retail and operational improvements in potash and nitrogen.

The focus on retail is to further expand our proprietary products portfolio, drive retail network optimization, and enhance our digital capabilities. In addition, we will continue to be opportunistics on tucking acquisitions in our core markets. The majority of the planned investment capital in our operations is focused on mine automation projects in potash and low-cost ground field expansions in nitrogen. We continue to target a stable and growing dividend with the increase approved by our Board of Directors yesterday, Nutrien’s dividend per share has increased by 35% since the beginning of 2018. Similar to the past, we will evaluate the potential for additional shareholder distributions as the year progresses. I’ll now turn it back to Ken.

Ken Seitz: Thanks, Pedro. As we look ahead to 2024, we expect increased crop input, market stability, and demand providing the opportunity for Nutrien to deliver higher fertilizer sales volumes and growth in retail earnings. We will continue to prioritize strategic initiatives that enhance our ability to serve growers in our core markets, maintain the low-cost position and reliability of our assets, and position the company for growth. We are hosting an Investor Day in New York on June 12th where we will provide more details on the strategic priorities across our integrated business, so watch for more details on this event over the next few weeks. We would now be happy to take your questions.

Operator: [Operator Instructions] Your first question comes from the line of Steve Hanson from Raymond James. Your line is now open.

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Q&A Session

Steve Hansen: Yes. Good morning, guys. Thanks for the time. Was hoping you could dig into your outlook on the Southeast Asian demand profile for potash in particular. It’s been one of the weaker price points in the market for the past year or so but you’ve described some good economics supporting demand. I’m just trying to get a sense of whether you’ve got good visibility into that, whether you’ve seen order flow, or what kind of sort of outlook you have there that gives you that confidence.

Ken Seitz: Yes. Good morning, Steve. And indeed, when we say 68 million tons to 71 million tons for 2024, Southeast Asia is certainly a part of that story and it’s owing to a few things. One, inventory levels are low in Southeast Asia entering the year. And two, looking at about MYR3800 per ton price for palm oil. That makes the economics of palm oil, given where crop input prices have gone, that looks favorable. So low inventories and improved economics in Southeast Asia makes that 68 million tons to 71 million tons. We think that, as I say, Southeast Asia is going to play a meaningful role in that. I’ll hand it over to Mark, and maybe Mark can just talk to some specifics around numbers.

Mark Thompson: Yes. Hi, Steve. Good morning. So, just to reiterate a few of the things that Ken mentioned, I think in Southeast Asia, actually, we’ve had two years in a row of consumption and shipments that would be less than normal. So we’ve got inventories that need to be restocked. And I think throughout the process of 2023, we saw high-cost inventories get worked down and are coming into 2024 in a much better position. As Ken mentioned, there are attractive economics in Southeast Asia for palm oil. Rice is a part of that picture as well. That’s playing a role that we think will lead to a positive rebound in demand there. And if you look at our global picture in terms of where we expect demand growth to come from in 2024, Southeast Asia is actually the biggest single contributor to that.

At the midpoint, we’ve got Southeast Asia up by about two million tons from a shipment standpoint, and are optimistic based on what we’ve seen moving through the fourth quarter of 2023 and so far in Q1, we understand there’s been solid movement and good shipments into Southeast Asia. So overall, as Ken said, we’re positive and constructive on what we expect to see from Southeast Asia this year for potash.

Operator: Your next question comes from the line of Joel Jackson from BMO Capital Markets. Your line is now open.

Joel Jackson: Good morning. Let’s talk about free cash flow and the buyback and capital allocation. Can you talk about, do you see free cash flow being similar in ’24 to ’23 you re-upped your authorization in the month, although you didn’t really do a lot of the buyback, kind of a prior authorization, you had a lot of the buybacks in Q1 under the prior authorization. So I’m trying to get a sense of do you think that your buyback on ’24 will be similar to ’23 in terms of total numbers, even understanding that it was heavy Q1, early 2023 under the prior authorization, and where that plays out, authorization, really maxing out as much as you can do for buyback versus other things like maybe doing some more opportunistic M&A in the U.S. or Brazil for retail, for example.

Ken Seitz: Good morning, Joel, and yes, thank you for the question. So with respect to 2024 free cash flow, obviously, as we’ve talked about, we’ve made some changes to our capital program and we’ve brought down some of those investing dollars and getting highly focused on the things that we talk about, like proprietary products in retail, like network optimization, like our digital investments. And yes, we will absolutely continue to look at opportunistic tuck-ins in North America and Australia. We have a history of those things and the economics for those things continue to prove out. So we’ll always look at those focusing on mine automation and reliability projects and finishing up some of the deep bottlenecking and brownfield investments in nitrogen.

That’s our focus from a capital point of view. As it relates to the year, there’s a number of moving parts. We saw the working capital give back in the fourth quarter of last year. We’re expecting from a cash conversion point of view to go back to more sort of normalized levels of about 70%. So you put that all together and it says, well, let’s see now how the year unfolds. We’ve just come out of a period of unprecedented volatility and markets are stabilizing potash, returning to sort of trend-level demand. These are all good signposts, but as it relates to the opportunity for continued distribution through share buybacks, we’re always going to look at that, that’s why we renewed the NCIV but it’s a matter of watching how the year unfolds now.

Operator: Your next question comes from the line of Adam Samuelson from Goldman Sachs. Your line is now open.

Adam Samuelson: Yes, thank you. Good morning, everyone. I was hoping to maybe ask about the nitrogen business and your own outlook for improved production and reliability in 2024. One of your North American peers has alluded to weather issues impacting production in January because of weather. Did you face any similar issues and help us think about given the capital invested in recent years to increase the capacity, that hasn’t really come true in terms of production and sales volumes, why we should have confidence that this year we’re going to start to see the benefits of those actions, especially where you just took an impairment on the Trinidad stock.

Ken Seitz: No, that’s great. Thank you, Adam. And yes, we have made a number of investments across the network to improve reliability. And certainly, for the absolute majority of our plants, we’re really happy with the way they’re running. We continue to assume that we’re going to be curtailed on gas in Trinidad. That’s part of the story for 2024 but for the things that we can control, we do have a number of insight projects that give us confidence on improving reliability. And I’ll hand it over to Trevor Williams, our Head of Nitrogen and Phosphate, to talk about that.

Trevor Williams: All right, thanks, Ken, and thanks for that question, Adam, and I’ll take you back to our Q3 earnings call. When we communicated that we’re taking several kind of proactive steps to address some of the reliability challenges that we had at a couple of our facilities. Just to bring it back, these actions included pulling forward a couple of major turnarounds at our facilities, as well as returning to operation one of our previously idle facilities or sites in Trinidad, which really allows for greater overall operational flexibility, as well as having the ability to more effectively manage through the impact of some of the gas curtailments and things that we’ve seen in Trinidad. And finally, with respect to the Trinidad area, it also provide a little bit more flexibility in terms of being able to provide some increased capacity utilization as we execute turnarounds on the island.

Now, while these outages did take a little bit longer than expected to complete, I’m really happy to be able to share that since returning to the plants, back to operation, they’ve been running extremely well. Finally, I just wanted to kind of highlight a couple of other things that across our North American fleet, obviously excluding where we did the pull-forward turnaround in Borger, the remainder of our assets in North America ran at 100% capacity utilization across the quarter and it is really the result of the investment that we’ve put in terms of reliability in those sites as well as completing some debottlenecks, we did some brownfield the bottlenecks, specifically at our Geismer facility. That facility is now running at full capacity at those debottleneck rates.

And then finally, really the work that the team has done, really to focus in on how do we continue to run our assets efficiently and effectively. Now, as a result of that, and Ken alluded to it, that really is giving us the confidence as we move into 2024. And as you’ll see from our guidance range, we’ve added almost 500,000 tons into our production forecast as we move into 2024.

Operator: Your next question comes from the line of Ben Isaacson from Scotiabank. Your line is now open.

Ben Isaacson: Thank you very much and good morning, everyone. When we look at the retail, how should we think about crop protection, is that a threat or an opportunity? Can you run through how the challenges have evolved? Is it region-specific, as you mentioned in South America? Is it structural or cyclical that can be cured with inventory destocking? Should we think about it being more volatile going forward? Just trying to understand how you see the CP business. Thanks.

Ken Seitz: Yes. Good morning, Ben. Thank you for the question. So, we certainly see crop protection as an opportunity, and I would say the challenges at the moment are really quite regional as it relates to Brazil. But I’ll hand it over to Jeff Tarsi to provide some color.

Jeff Tarsi: Yes, Ben. Hi, thanks for the question. And when I look at the crop protection business, if I look, and Ken mentioned in his commentary, we saw a lot of pressure in the fourth quarter as retailers in Brazil continued to liquidate their inventory there. We feel like we’re in a really good position on our inventory going into ’24, and I think we’ve talked about it quite a bit, that we expect to see significant improvement in the back half of the year in the crop protection market in Brazil. If I look at North America, I’m actually quite pleased with where we ended the year from a crop protection margin standpoint, we were just under 25%, and that’s historically in line with where we are generally on crop protection margins, and the same for Australia.

So you asked the question, how do we see it going into ’24? I see it as an opportunity, particularly from a Brazilian standpoint, that we should see a lot of recovery there from a margin standpoint, and in North America, look, we’re in a really good position from an inventory standpoint. If I look at it year-over-year, our inventories were down about $400 million on the crop protection segment. So this gives us really nice leverage with our suppliers. We were very opportunistic in the fourth quarter on our purchases on crop protection, which sets us up really well going into ’24.

Operator: Your next question comes from the line of Jacob Bout from CIBC. Your line is now open.

Jacob Bout: Good morning. In the past, you talked about mid-cycle EBITDA, kind of $7 billion to $7.5 billion, and I think you were referring to be able to achieve that by 2027. A couple of questions here. Maybe just talk through what pricing looks like today versus what your cycle expectations are, and do you think that this is still attainable by 2027? Just talk through what your expectation on potash volumes would have to be for that to happen.

Ken Seitz: Yes, thank you, Jacob, for the question. So yes, we do think it’s achievable. It’s really owing to a few things we talk about returning or advancing this year toward more normalized or normal margins within retail this year. You have our guidance range, but we would call that in the mid-cycle, more close to $1.9 billion to $2.1 billion coming out of our retail business. And that’s also the organic growth that we cite in proprietary, our network optimization, work digital, and gives us confidence in that range. We also talk about the investments that we’ve made in prior, so that we have the ability to add one million or two million tons compared to 2023 levels that are going to. That gives us the confidence in this growing market to deploy those tons.

And then we also talk about the things that Trevor Williams just cited and ongoing investments in debottlenecking and brownfields that allow us to add a million to a million and a half tons of nitrogen. So from a volume perspective, yes, prices. So, I’ll hand it over to Mark to talk about pricing, but what we would see in the mid-cycle is certainly pricing a bit above where we see prices today. But Mark, over to you.

Mark Thompson: Yes, thanks, Ken. Good morning, Jacob. So, yes, I think Ken covered the retail portion of that and the path to mid-cycle EBITDA and retail’s role in that and the volumes really well. So just on price, in that scenario, on an approximate basis, to feed that $7 billion to $7.5 billion of EBITDA, we would call potash, in that scenario, about $400 per ton, both globally and within North America. Within North America, we’re quite close to that number today but internationally, obviously, we’re well below that. And so we do have a gap there. But with the fundamentals improving that Ken talked about and the time horizon in front of us as demand improves, we certainly see a path there. From a urea standpoint, our assumption is also about $400, a short ton.

And so again, we’re not that far away from that today and as we look at in-season pricing and the strength that we expect in urea this year, we do see positive fundamentals. And from an ammonia standpoint, looking at the Tampa benchmark, it’s about $500 a ton. And again this year, we expect to see a constructive outlook for ammonia, some linear year volatility. But all of those prices, we continue to believe are quite reasonable. And when you go back to our assumptions for why that’s the case, it’s the factors that we’ve seen change fundamentally the last few years in terms of inflationary impacts, changes in trade flows, changes in energy prices, all of those things feeding into a structurally higher fertilizer price deck over time.

Operator: Your next question comes from the line of Andrew Wong from RBC Capital Markets. Your line is now open.

Andrew Wong: Hi, good morning. Thanks for taking my questions. So, just, first on the potash markets. They seem to have what seems like a bit of a slow start, but affordability looks good and both your guidance and Mosaic calls for higher year-over-year demand growth. So I guess my question is like what catalysts are we looking for to kind of get the market moving a little bit more here? And what’s your outlook on prices? And then just secondly, on potash production like Mosaic, they announced a curtailment at Colonsay. Would that be something that Nutrien considers as well, just given your outlook versus your operating capacity? Thanks.

Ken Seitz: Good. Thanks, Andrew. And I’ll hand it over to Mark here to maybe to go market by market and what we’re seeing sort of on the ground, certainly as we head into the planting season in the Northern hemisphere and the balance of the world. But, yes, in the U.S., we’ve talked about the very strong fall application season and strong prepays heading into the spring planting season. Actually, Jeff and I are talking about strong seed sales as well. And so things are pointing to a strong year in North America. Once again, Brazil. While it’s been some weather challenges there, we think we’re probably experiencing some seasonal softness in pricing in Q2, Q3. We expect that prices, there could be some firming in that part of the world.

Our customers are in good shape at the moment. We would say that yields and price over the last few years have been strong, albeit now some risk associated with El Nino. So for the markets where our retail business, as we see, we see pretty strong on-the-ground fundamentals, and we are anticipating normal application rates. Maybe for the rest of our distribution, market to market. I’ll hand it over to Mark.

Mark Thompson: Sure. Thanks, Ken, and good morning, Andrew. So, yes, I think, as Ken said, we’re entering 2024 with potash showing greater price stability, attractive pricing levels for growers, and really the need to rebuild inventories and soil potassium levels after the last two years in a number of key markets. And I think an important factor here is that in 2023, we would estimate that consumption in aggregate for potash across the world was actually higher than shipments. So that resulted in an aggregate drawdown in inventories in our view. So these factors are supportive of our expectation for shipment growth to that range of 68 million tons to 71 million tons in 2024 that we’ve talked about. So when we actually look across most global markets today, we do see a general trend of potash inventories being in a balanced to tight position.

The exceptions to that would be Brazil and China, which both are estimated to build some inventory on a year-over-year basis but that was on the back of extremely strong consumption and record imports in both of those markets in 2023. So those are the dynamics that are shaping our view of 2024 demand and we see the strongest growth potential in 2024 in those markets where inventories are historically tight or where below-needs applications have left soils more depleted. Those markets, maybe just to dive into it in a little more detail that we would expect to grow, which we’ve provided in our outlook presentation, would be Southeast Asia, Europe, India, and Latin America outside of Brazil. And really, as we’ve talked about earlier in the call today, Southeast Asia is the largest of those and Europe’s a meaningful contributor to that as well.

So I think just to reiterate, kind of touch on a few key markets. Southeast Asia, we see about two million tons of demand growth at the midpoint. That actually wouldn’t get us back to historical trend levels and after the last two years of under-applications, we see that being reasonable. And again, for the reasons we talked about support of in-country economics on palm oil in Southeast Asian countries and rice, the impact of El Nino being less severe than originally feared, and depleted inventories in that market. So we think there’s a good setup there. Europe, I mentioned, is another market where we see growth. At our midpoint, we would have about a million tons of growth in potash shipments into Europe in 2024, which again would represent a strong year-over-year improvement, but not a full recovery back to trend levels.

And for many of the reasons that we just talked about in Southeast Asia, application rates there have been low for the past two years due to the volatility in prices and actually challenges for supply into the region. So it does appear that we’re poised for a rebound in Europe and supportive weather looks like it could set up to an earlier start to spring application in that market. Maybe just to turn to Brazil and China. And these are the two markets that really surprised to the upside in the second half of 2023. We saw record imports into both of those markets last year. And it’s important to note that in both cases, consumption was estimated to be extremely strong, which was the primary driver behind the large growth in shipments in those markets in 2023.

If we look at Brazil, we estimate that inventories entered the year about 700,000 tons higher than they entered 2023. As Ken touched on some poor growing conditions and adverse weather impacted demand and sentiment to start the year. But in recent weeks, we understand that inquiries and buying interest in the country have increased and the expectation is that buyers will be positioning as we move into Q2 and prepare for the next major planting activity in Q3. And that market is supported by attractive prices for distributors and growers. We would expect shipments to be roughly similar to 2023. In 2024, but we do expect that consumption is going to increase assuming supportive weather. In China, imports are anticipated to have reached a record in 2023.