Good morning. And welcome to the ADM First Quarter 2021 Earnings Conference Call. All lines have been placed on a listen-only mode to prevent background noise. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Victoria de la Huerga, Vice President, Investor Relations for ADM. Ms. De la Huerga, you may begin.

Thank you, Chris. Good morning, and welcome to ADM's first quarter earnings webcast. Starting tomorrow, a replay of today's webcast will be available at adm.com.

Thank you, Victoria. This morning, I am pleased to share with you results that demonstrate an outstanding start to 2021, building on our momentum from a record 2020. We reported first quarter adjusted earnings per share of $1.39, more than double the year ago period. Adjusted segment operating profit was $1.2 billion, 86% higher than the first quarter of 2020 and our sixth consecutive quarter of year-over-year adjusted OP growth. Our trailing fourth quarter average adjusted ROIC was 9%, 375 basis points higher than our 2021 annual WACC and significantly higher than the 7.6% in the year ago period. And our trailing fourth quarter adjusted EBITDA was about $4.2 billion, 19% higher than the prior year period. I am proud of our team, and they continue to deliver sustained strong growth, powered by their continued advancement of the strategic transformation of our business, outstanding execution, excellent risk management, and commitment to serving the evolving needs of our customers in new and innovative ways. I'd like to take a moment now to highlight some of the trends, developments and accomplishments from the first quarter. Turn to slide four, please. First, we are encouraged by many of the demand indicators we are seeing. From a geographic perspective, China was one of the first countries to emerge from COVID-related restrictions, and we are continuing to see significant export demand driven by its economic recovery.

Yes. Thanks, Juan. Good morning, everyone. Slide eight, please. The Ag Services and Oilseeds team delivered an outstanding quarter with operating profit of $777 million, representing a record for a first quarter. Ag Services results were substantially higher year-over-year. Results were driven by a record Q1 for our North American origination team, which executed extremely well to capitalize on strong Chinese demand. As expected, results in South America were significantly lower versus the prior year period. Farmer selling was lower versus the extremely aggressive pace in the year ago quarter. Lower margins, including the impacts from the slightly delayed harvest and higher freight costs also affected South American results. Results for the quarter were affected by about $75 million in negative timing related to ocean freight position. Those impacts will reverse as contracts execute in the coming quarters. Crushing delivered its best quarter ever, as the business leveraged its global footprint and diversified capabilities to capture strong execution margins in both soybean and softseed crushing, driven by robust vegetable oil demand and tight soybean stocks. Net timing impacts for the quarter in crush were minimal.

Thank you, Ray. Slide 12, please. I'm proud of the team for our great start to 2021. And I'm even more proud of the strategic work we have done to transform our company and enable our growing success. We began in 2011 by committing to specific strategic goals and financial metrics focused on what we call the three Cs: capital discipline, cost reduction, and cash generation. We launched new initiatives like our $1 billion challenge with prioritized operational excellence, and we focused on returns as our primary financial metric. We call that getting fit for the journey. Once we were fit, we launched the next part of our strategy, focusing on three core pillars to enhance returns, deliver more predictable growth, and strengthen our ability to control our results. During this time, our team has done a great job, optimizing business performance, realigning our portfolio, and building a global leader in nutrition, driving efficiencies through our operational excellence initiatives and expanding through organic growth investments, M&A, and the broadening of our customer base and product offerings. Now we're moving into the next phase of our strategic transformation by sharpening our focus on two strategic pillars: productivity and innovation. Our productivity efforts will take many actions that were part of our optimized and drive focuses and boost them to the next level. The productivity pillar will include advancing the roles of our Centers of Excellence or COEs in procurement, supply chain, and operations to deliver additional efficiencies across the enterprise, the continued rollout of our One ADM business transformation program and implementation of improved standardized business processes, and increasing our use of technology, analytics, and automation at our production facilities in our offices and with our customers. Our innovation activities will help us accelerate growth and profitability, not just for the near term, but importantly, for the long term. We will expand and invest in improving the customer experience, including leveraging our producer relationships and enhancing our use of state-of-the-art digital technology to help our customers grow. Sustainability-driven innovation, which encompasses the full range of our products, solutions, capabilities, and commitments to serve our customers' needs, and growth initiatives, including organic growth to support additional capacity and meet growing demand, opportunistic M&A and increased leveraging of our very successful venture capital portfolio. We'll support both pillars with investments in technology, which include expanding our digital capabilities and investing further in product research and development. And of course, all of our efforts will continue to be strengthened by our ongoing commitment to revenues. As I look at our long-term plans and this evolution of our strategy, I'm very excited about the value creation opportunities ahead of us. Our teams are continuing to perform at a high level and doing a great job serving our customers. The demand outlook for our products is strong, driven by the pre and during global trends of food security, health and well-being, and sustainability. And we are delivering on our potential and our promise. That is why we are even more optimistic in our 2021 outlook today than we were three months ago, with expectations for significantly higher full-year operating profit and EPS versus our record 2020. And as we look beyond 2021, we expect that our sharpened focus on productivity and innovation, combined with continuing demand expansion driven by the fundamental needs and evolving demands of our global customers and the multi-year COVID recovery will deliver sustained growth in earnings in the years to come. With that, Chris, please open the line for questions.

Thank you. The first question comes from Ken Zaslow of Bank of Montreal. Your line is open.

Hey. Good morning, everyone.

Good morning, Ken.

Just want to touch base. Your comment was really interesting, that you expect growth, sustainable growth for years to come. So with that, just a couple of points. One is, do you look at 2021 or 2020 as the base year from which you can grow? And then secondly, what are the key demand drivers that you see beyond 2021 that will continue to propel you? Or is it more internal actions that would create the growth?

Yes. Thank you, Ken. Listen, as I was referring in my remarks, we see the future with a lot of optimism. I mean, we think that fundamentally, we have, as you know, a strong agenda of both productivity and innovation where there are things that we can control, that we drive under our control. And we've been executing a similar plan. So now you're going to see it strengthen. And it has a more longer horizon reach, if you will, that's where we like about this sharpening. But all this is supported by these three strong trends that we see in food security, health and well-being, and sustainability. So let me give you a little bit of flavor there. We continue to see strong demand. You see food security, of course, as the global population grows. Protein demand continues to grow around the world as people increase their standards of living. And as countries come back from the pandemic on this demand that was, to a certain degree, suppressed, we see that in China, we see that in the US. And we believe that given the uneven vaccine recovery of vaccine rollout, this will take several years. So that's in an environment, Ken, as you know, a very tight supply, demand balances. So we expect an environment of good profits for the following years. Then when we look at health and well-being, that's propelling our Nutrition division and many of our other offerings in which we continue to see strong growth even exacerbated, if you will, with pandemics or other events. And we continue to see more demand for products made based on plants that what we call biosolutions or products that actually replace industrial products made from resources that are not renewable. We have a long list of interested parties in doing more of that, and we continue to develop solutions for that. So again, when we see the trends, when we see the strong demand environment in a tight supply, demand environment, plus the agenda of productivity and innovation, we feel very strong about our ability to deliver earnings growth from where we are today.

So in 2020 or 2021, would you say, is your year from which we could start thinking about growth?

Yes. I think that we - 2021, we're going to grow significantly versus 2020. So in 2021, we are establishing this sharpening again. So if you will, maybe we can reset to that level to 2021 and we start it from here. We have a rolling five year plan, as you know, Ken, that we constantly update. And we constantly make it more robust, so we can deliver earnings growth year-over-year.

Great. I appreciate it. Thank you.

Thank you, Ken.

Your next question comes from Adam Samuelson of Goldman Sachs. Your line is open.

Yes. Thanks. Good morning, everyone.

Good morning, Adam.

Hi. So, I guess, my first question, really just trying to think about the market environment a little bit, and obviously, a lot of crop currents happening at the moment. Specifically, I want to think about on the oilseed franchise and the expansion of renewable diesel. And as we think about, one, you can sort of see it already in the soybean oil market and what that's doing to crush margins. But as we think about the second half of the year into next year as some of the bigger capacities start to come on, how do we think about the earnings leverage, both in your crushing franchise, but also in the edible oils business with the refining that we - a business that never really got that much attention and grown much for a number of years given the move away from Trans fats, but would seem to be kind of very strategic for a bunch of refiners who don't have pretreatment over the next couple of years? And then I got a capital allocation question afterwards.

Adam, listen, we said it before, we feel very strongly about the future of our Oilseeds business. It's a business that was built traditionally in one leg, if you will, from the mill supporting all these, and we were always waiting for the oil story. The oil story, I mean, you can see that right now playing up, oil values that reach record levels, softseed margins that have been the best in the last eight years, if you will. So they are supporting very good soy crush margins and great softseed margins. We invested in this many years ago, remember, with all the switch capacity. We have about give or take 15% of our total crush capacity that can be switched from soybeans to softseed. So that's an advantage for us. And now all of a sudden, we are having this new demand that is coming because of all the sustainability trends that we discussed before with this in the form of renewable green diesel. So it just comes to strengthen our belief into this business that is very strategic for us. And to be honest, I am very proud of the way the business is executing. These are not easy markets to navigate with a lot of volatility, with very big values, and they are having—touch wood—an impeccable run. And they've done very well, given their sophistication and knowledge of—and to be honest, also the visibility that being a full value chain supplier and a global supplier gives us. So continue to work very closely with our food and fuel customers and staying close to them to make sure we can read what's coming down the pipe. But again, Adam, very, very encouraged by all these developments and very happy for our strategic Oilseed business.

Okay. That's really helpful, Juan. And my second question is really on the balance sheet. Maybe this is more for Ray. And I'm just trying to think about kind of cash capital deployment from here. Obviously, you have to be very sensitive to the increase in commodity prices and the impact that has on readily marketable inventories. But I mean impressively, your credit capacity has actually gone up on a year-on-year basis, despite the rising RMI. And so I'm just trying to think about what would it take to see cash return to shareholders or more aggressive or offensive M&A moving forward? It seems like there's a lot of underlying cash generation in the business, and it doesn't seem like we've got a clear kind of target of where it's going at the moment.

Well, first of all, the balance sheet is what I consider one of the greatest assets of ADM. And while inventories have actually increased 50% compared to March of last year, we still have significant available credit capacity to undertake actions, right? And so I think the first priority is to continue to fund the working capital needs. It's not a surprise. Commodity prices continue to go up right now. And so therefore, we will use our balance sheet to kind of fund additional working capital requirements. And - but secondly, we have flexibility to do whatever we need to do from a strategic perspective. As you know, in prior periods, during higher commodity prices, there are distressed assets in the marketplace. And so to the extent that there are distressed assets that make sense for us to acquire in order to consolidate, we'll look at those. That's one of the big advantages of our ADM balance sheet. So - but we all know that eventually commodity prices will come down, and that will free up additional capital on the balance sheet. And then we can look at additional incremental returns on capital to our shareholders at that point in time. But again, the dividend—we've increased the dividend. That's an important element of return on capital to our shareholders. But I'm convinced that our balance sheet—because we all know prices go through cycles—there will be a release of working capital at some juncture that will again free up significant capacity for us to take additional return of capital actions.

Okay. That’s a really helpful color. I’ll pass it on. Thank you.

Thank you, Adam.

Your next question comes from Tom Simonitsch of JPMorgan. Your line is open.

Hi. Good morning, everyone.

Good morning, Tom.

Hey, Tom.

Could you give us some more color around your—how you're managing your crush assets this year compared to any other? To what extent are you locking in crush capacity for the next few quarters? And on the oil side, how are you approaching negotiations with potential renewable diesel customers versus your more traditional food customers?

Yes. So I can say we have reasonable visibility on Q2 for Oilseeds as we have a book build. And we stay a little bit more open for Q3 and Q4. That's probably to the extent that I will disclose. In terms of food versus oil customers, listen, we're staying close to both. Of course, we provide—we have long-term relationships with our food customers that we've been working with them through all these and educating them on this new demand that is coming. And we are forging new relationships with customers from renewable diesel that of course, the big issue for that industry is feedstock availability. So we're having a lot of discussions that range from the tactical to the strategic discussions with some of them as they decide on their future investments. So that's what I would describe the relationship.

Thank you. And then just a question on Nutrition, I think you mentioned a shift in demand for texturants. Can you provide some more color there?

Yes. We've seen some softness in some of those segments. But I would say this is a little bit of a transition time in—Nutrition goes to so many applications, and depending on the geography, foodservices in some parts are coming back and in some other parts, that's still delayed. So, I would say, in general, I'm very pleased actually. Nutrition surpassed my own expectations this quarter by growing profitability by around 9% and revenue 5%. It was—the demand recovery from COVID and the impact of that in different markets is very uneven around the world, as the world is getting access to vaccination at different rates. So we are seeing that. So, as I said, this was a quarter of, remember, investment in Nutrition. So we were expecting results similar to last year. We end up delivering results that are 9% better than last year, so very happy with this. We had some specific pockets of softness, maybe some chewing gum kind of softness, some softness in some places in Animal Nutrition. But overall, very strong flavors, beverages, supplements, fibers, probiotics, specialty proteins. So, the main trends remain there.

Thank you for that. And maybe just one more question for me. If you wouldn't mind, could you share your house view of US planted acres of corn versus beans?

Yes. I would say, in our view, given the early planting start that we have in the US, I think we have corn about 17%, on soybeans and about 8% at the moment. We believe that there is probably upside to the USDA numbers. So we believe that by the next time USDA will report acres, we're probably going to find maybe five more million acres, combined between soy and corn, kind of evenly split, if you will, give or take between the two.

Excellent. Thank you very much. I'll pass it on.

Thank you, Tom.

Your next question comes from Luke Washer of Bank of America. Your line is open.

Hi. Good morning, everybody.

Hi, Luke.

Hey, Luke.

So I wanted to touch on soybean oil a little bit. I know you've talked a little bit about the renewable diesel trend. But have you seen soybean oil demand ramp this quarter relative to your expectations perhaps at the beginning of this quarter? And is this largely driven by renewable diesel demand? Or are you also seeing increased demand for edible oils? And is there any distraction is happening with the prices where they are?

Yes. Listen, we continue to see strong demand. I think that as some restaurants and in some places are reopening, we started to see food services coming back a little bit. To be honest, we saw that across the company, not only in soybean oil, I would say March orders were significantly better than January and February. And I think we see that continuing in April. So again, a recovery, but we can see that. I would say, of course, green diesel customers are starting to show in demand. So we see that increased demand. So in general, we see a strong demand. In terms of disruption of demand, we haven't seen that to any degree. Probably the only example I can pinpoint is Brazil with biodiesel that reduced from B13 to B10. That's probably the only thing you can say. Things have become expensive, at least. And Brazil, as I may—as I've mentioned in my onset remarks, Brazil is having a very difficult time with COVID. So I think that the overall economy is suffering. And I think the government is trying to alleviate some of the pressure on inflation there. So—but that's probably the only example I can pinpoint at this point of demand disruption.

Great. Thanks, Juan. And then maybe one more on Nutrition, can you talk about what's driving your confidence in the 15% CAGR that you expect this year? What are the ways that you're driving operating profit margins higher? Is this simply growing in higher-margin businesses? Or are you doing cross-selling or any other actions you're taking? Maybe just some of the puts and takes for this year.

Yes, absolutely. Listen, remember the 15% came from—we put together the five-year plan. And when we see us achieving our target of $1 billion OP, basically by 2024, give or take, in order to get there, we need to grow 15%. So we were planning to start this year. And this year, it's not an exception to that. We plan 15%. When we started the year, we were planning to start the year, as I said, kind of flattish versus—and the business continues to show strength. How that strength comes part is revenue growth. Part of my confidence is given by the pipeline. We have a strong pipeline. We are very—the team is very disciplined and religious in looking at the pipeline and looking at customer-by-customer and the projects. And that pipeline continues to grow, and our win rate continues to grow. So those are very positive indicators that your value proposition is very appreciated by our customers. Certainly, another thing that we do is that the team manage the product mix very well. And that allows us to increase profitability even in excess of the revenue growth that we see. And you know, there are different parts while, for example, for flavors and for plant-based proteins and certainly for probiotics is much more a revenue growth story. For parts like Animal Nutrition, it's more like a margin recovery story. And so we have different ways to manage this portfolio that we call nutrition, but it's a very complex portfolio. But that complexity also brings a lot of growth opportunities. And that's why it gives us confidence that it's a very balanced business from an opportunity perspective, supported by a very strong pipeline.

Sounds good. Thank you.

Your next question comes from Robert Moskow of Credit Suisse. Your line is open.

Hi. Thank you and congratulations. I have a question about the crush margins in the quarter. I mean, such an outstanding result. And I think you've mentioned that risk management or just execution played a role. If you look at spot margins during the quarter, just looking at board prices, they weren't nearly this good. But I've heard that you and others have been delivering results much better than that. So I guess, my question is, can you explain why it's so different from what we see in the spot markets? And is this sustainable into Q2? Or are there some unusual aspects of the first quarter that we should know about?

Yes. No, listen, it was a very clean quarter. There's nothing that you should know about other than cash crush margins remain very healthy. We have a strong product demand from both meal and specialty oil. And these margins remain considerably stronger than what board crush indicates, particularly in North America and Europe. If you look at board crush in North America or Europe per month is about $25 per ton, and then we see margins on a cash basis of around $40 per ton. So there is a significant difference there. I would say, we see—as I said before, we have reasonable visibility into Q2 given the book of business we have. So we shouldn't see any surprises there, and we are expecting another good quarter of crush over there. So I mentioned before, we have our switch capacity. Softseed margins have been good. They moderated a little bit since Q1, but they continue to be very good. So oil values continue to be strong. And demand for our customers in mill in North America, our customers are enjoying good margins at this point in time. So they are trying to produce as much as they can. So we see strong demand from both lakes of the crush. So we feel good about it at the moment.

Okay. Thank you.

Welcome.

Your next question comes from Ben Bienvenu of Stephens. Your line is open.

Hi. Good morning, everybody.

Good morning, Ben.

I want to focus on – with two questions on the Carbohydrate Solutions business, which was really, really solid in the quarter, and focusing first on those Starches and Sweeteners business. To the extent you can, can you disaggregate the contribution from your ethanol production out of your wet mills versus the kind of core Starches and Sweeteners business? And on that Starches and Sweeteners business, were net corn costs a tailwind for you guys? I know you favorably hedged your gross corn costs in Q4. So I'm wondering kind of what the relationship between that hedged corn versus the strong co-product values delivered as it relates to your realized net corn costs?

Yes, Ben. So let me improve reverse order. So net corn cost was a tailwind for us. I mean, clearly, as we pointed out in the last earnings call, we actually procured a lot of our requirements at a very attractive price last year. And hence, we benefit from basically a very good procurement. And hence, net corn was a tailwind for us, despite the fact that when you look at the board, corn costs are higher right now. With respect to the question on disaggregating Starches and Sweeteners from ethanol, my only comment is one of the big improvements in Starches and Sweeteners in the quarter compared to last quarter, last year's first quarter was the fact that we didn't have the corn oil mark-to-market impact. If you recall last year, we had about a $50 million negative impact due to the corn oil divergence from soybean oil. We didn't have it this year. So that was clearly a tailwind in terms of our results. From a volume perspective, when you look at the Starches and Sweetener business right now, we're still—we're certainly looking, I'm looking at corn—high fructose corn syrup. And corn syrup, we're still down versus last year. So we are suffering from the impact of the pandemic and because the foodservice sector is not fully recovered, we indicated that we're starting to see elements of recovery in the month of March. But from a volume perspective, in the first quarter, total Sweetener volumes are still down versus last year, right? So therefore, that's kind of like a headwind. But we expect that to progressively recover as we move through the year. So I guess, overall, I mean, we've been actually pretty pleased in terms of the performance. Given this particular headwind we had in the first quarter, we were very pleased in terms of how we manage the business, favorable net corn procurement, favorable risk management. And frankly, even with the cold weather impacts that we had in the first quarter, we were able to keep on delivering to our customers, which is very, very important.

Very good. Okay. Great. My second question is on DCP and your decision to restart your dry mills. We're seeing improving driving demand, gasoline demand off of kind of low this year and last year. I'm curious, though, we've seen production in the weekly EIA numbers come out that have been a little bit lagging, I think, what might be expected when thinking about your facilities coming back online. Can you help us think about your outlook for as much visibility as you have as it relates to ethanol S&D? And when you think about the velocity of restarting your mills, what is your focus there? Are you worried about that disrupting the S&D in ethanol? To the extent you can give us any color on?

And they have grown in the first three months of the year. They import proteins, that’s up like 20% and they continue to have very strong forecast for the importation of grains to feed animals. So that's what we're seeing. Of course, corn prices have been expensive in China. And so, China has been taking as much as wheat as they can from Europe to try to make a little bit of substitution. But they also don't have infinite wheat reserves. And during this year, we think that both coal reserves and wheat reserve needs to be replenished at one point in time. We don't think that that's happening now. Nobody is replenishing inventories in the face of an inverse. But we think that that may happen later in the year.

Okay. And one, if I could just ask you a follow-up about your comments on sort of bio-based products that you made during your prepared remarks, were you just referring to sort of the initiative – the existing initiatives around FDME and cardboard and fiber and acrylic acid? Or are there new things that you're looking at? Or going back to some of the old stuff like PHA? Or just - what did you want to tell us about that, anything incremental?

Yes. I think that there is a portfolio of things. Some of the ones you mentioned, we are not going back to PHA. But there are some more in areas like, construction or pharma or personal care. We continue to find customers that have application development capabilities, but they want to change their input. And instead of being natural gas or oil, they want it plant-based. And for that, listen, we have—we stand on a great source of sugar that is the car solution business. We have fermentation technologies. And we have a good cost position here in the US, and as we have the capability, the critical mass. So I think that we are an attractive partner that everybody that is brainstorming or looking for a solution to match their sustainability targets is having discussions with our team. So there are some things that we cannot unveil right now, but we may unveil it over the course of the year.

Thanks very much.

You're welcome.

Your next question comes from Michael Piken of Cleveland Research. Your line is open.

Yes. Good morning. I just wanted to talk a little bit about South America. Maybe we could start with Brazil and just you know, things like there have been some weather issues with the safrinha crop. And just trying to understand, how you see kind of your volumes and business shaping out in South America over the next couple of quarters? And if net-net, at this point, do we—are we cheering for a bigger South American crop or a smaller South American crop with respect to your overall global footprint?

Yes. Thank you, Michael. Yes. South America, the weather in South America, of course, delayed a little bit the growth. And certainly, it's hurting a little bit the safrinha. We still expect—traditionally, April and May are dry weather months in Brazil. So that's not great for this. And that's what's putting a little bit of the premium in—the weather premium on corn. So we expect that crop to be a little bit smaller. And Brazil exports about 35% of their corn production. So that is an impact in the market. What are we rooting for? We are rooting for larger crops. We like to move crops. So the soy crop is expected to be a good one, maybe 135 million, 136 million tons, so that's in check. And I think what Brazil is doing at the moment is maybe getting a little bit of corn from Argentina. Certainly, it's getting wheat to try to replace some of the corn in feeding. Because adjusted, as I said before, the B13 biodiesel to B10. So it's a year in which Brazil needs to navigate with—in very tight stocks. And so it's going to be a difficult year and a year of heavy management for the Brazilian, the crush and the grain side of this.

Great. And then as a follow-up, just thinking ahead to 2022, with the projected growth in renewable biodiesel combined with a very—or a tightening corn market. I mean, how do you sort of see the acreage playing out in the US for 2022 between corn and soybeans to meet this demand? And I guess from your perspective, I know you guys have some swing capacity, but just, it seems like there's other crushing capacity up in Canada. Softseed, three of their competitors have announced expansions. How do you see kind of the margin environment working out if we need to plant more corn next year? Thanks.

Yes. I think that, of course, the farmer reacts to pricing. And although this may be too late to shift a lot of acres to corn, given how late we are already, I think, first of all, they will try to plant as much as possible next year as well, given prices will continue to be elevated. I think, listen, as it gets tied in the market, that's an advantage of our value chain. Our procurement, our long value chain, the fact that we have such a good coverage of everywhere, in a tight market, that's where our footprint shines and we get the competitive advantage, if you will. So we like to have more crops. But in periods in which crops are going to be tied, we have a good system to make sure we get our hands into the crops. And sometimes basis goes up. But to be honest, given the strong demand and the good profitability of our customers, I think we will be able to price those in. So I think that we are looking constructively about in terms of margins for the future.

And your thoughts on the acreage shift?

It's too early to tell. And there are too many factors. I mean, we are still trying to plant, we haven't planted like 10% of our crop, it's difficult to speculate about the 2022 crop here.

Okay. Thank you.

Your next question comes from Ben Theurer of Barclays. Your line is open.

Hi. Good morning, Juan, Ray and thanks for taking my question.

Good morning, Ben.

Congrats on the results.

Thank you.

Two quick ones. So first of all, you gave a little bit of guidance into the different segments, but could you elaborate first on the Ag Service piece within ASO, how you think about that turning into 2Q and particularly in light what we're seeing in your appendix on the cumulative crush deferred timing gains? Because I remember last call, you said the vast majority of the close to $300 million to likely reverse within the first half. And we haven't seen much in 1Q. So how do we think—shall we think about those timing gains? And how shall we think about the underlying business within Ag Service in particular over the second quarter?

Yes. For Ag Services, seasonally, Q2 will be lower than Q1, right? I mean that's what happens. I mean North America, we had a very strong Q1 in terms of North American exports. Again, partly as Juan indicated, a delayed South American harvest. It allowed the export window in North America to really benefit. And then we just had significant demand pull, which resulted in very strong elevation margins in the first quarter. So second quarter for Ag Services, it will revert back to more of a normal level here. The demand environment is still good, but it's not going to be as stellar as what we saw in the first quarter. On your question on timing differences, remember, this is a question, right? I mentioned in my prepared remarks that there's about $75 million related to global trade and ocean freight that will reverse over the course of the year. In the appendix, the timing effects referred to in the appendix are related to crush. And just a reminder, in the first quarter, we didn't see much of a reversal in the first quarter, despite the fact that we had at the end of 2020, about $295 million in timing effects. And the reason being is that while we're seeing some reversals occurring, we're also building up new timing effects, because as you know, cash crush remains extremely strong. So some of the new contracts we're putting on, we're actually creating new timing effects. And so I just want to just caution people that in this type of environment, even though there's about like $265 million of timing effects yet to unwind because of new timing effects that will likely occur over the course of the year, we may not see the full unwind occur this year. So that's just my only caution I want to provide listeners to the call on these timing effects. Thank you.

Okay. Perfect. Thank you very much. I'll leave it here. Thanks. Congrats again.

Thanks.

Your next question comes from Eric Larson of Seaport Global Securities. Your line is open.

Yes. Thank you and congratulations, everyone.

Hi, Eric.

Hi, Eric.

I'll make it really quick I have a couple questions that—one's a real near term question of kind of exports over the next couple quarters, the USDA is way behind I think in what they're going—what they're giving China credit for corn exports through the year, something like 6 million or 7 million metric tons, and yet we're seeing the cash markets, futures are strong, but the cash markets are nothing short of astonishing. So are we trying to fill some of those on-price, maybe, China contracts from US farmers, are they just holding back? I guess how tight really is the US corn market? We know the oil markets are really tight. Canada's importing rapeseed from the Ukraine, so we know that the North American oilseed markets are tight, but how tight is the US corn market right now given cash prices?

Yes. Eric listen, we think as I said before that the US continues to be competitive in the second quarter for corn exports, so we're going to see some of those exports. As Ray was saying before, Ag Services probably innovation margin will not be the same because we won't have the same program of soybean on top of that. China continues to be buying everything they can, they are buying corn, but they are buying wheat as I said before, from several places and we have certain weather spots in the world. Canada and France are too cold and too dry, that has put some pressure on wheat with all this demand. Australia's infrastructure is trying to recover from a cyclone, so the exploitability of wheat there is also a little bit limited for loading that has created some pressure. So, for the moment corn continues to be competitive, the US exporting corn, but pretty soon it will become landed in China a little bit more expensive than wheat and then—but then we're getting tighter because of the bad weather. So we are looking at all those dynamics. So it's very difficult to answer this tough question specifically, but that's what I will think that all day is looking at all those dynamics and making sure we alter our product flows to fit the best origin.

Okay, yes. Okay, thank you. Yes, well, Chad is playing every bushel of barley and sorghum and I think they're around the world everywhere, but. So the final question is a longer term question that I'm really - somewhat concerned about, we've seen the Biden administration now talk about a 30% Conservation Plan, meaning they want to put 30% of USA, of all US land, all 30% of all water into conservation programs. At the same time increase the CRP program. Does that mean that we're in a land grab, I know we're in early stages, just as I said buy land, do we encourage people to put it aside. Does it take more farmland out of production now at a time when we really actually need the production? How do you - what are initial reads of the Biden's recently announced conservation plans?

Yes. Listen, I think the administration has shown from the beginning that of course, fighting climate change was going to be one of their priorities, which we support. And we have a strong sustainability program. I think that we need to start working on—and it's important to work very closely with the farmers to try to listen to—the farmer understands the responsibility. We have at the moment maybe 25% of acres doing precision agriculture, which I think will increase yield without needing more land. And I think that there will be a discussion with the administration and it will be a pressure between environmental long-term goals and short-term feeding needs of the world. The world needs the US capacity as they need the Brazilian capacity, so these prices show that we need those acres. So I think that this cannot be automatic, is something that we will have to work out balancing all the stakeholders, people that need the food or with the long-term needs for conserving the planet.

All right. Thank you, everyone.

Thank you, Eric.

And that was our final question for today. I will now return the call to Ms. de la Huerga for final remarks.

Thank you, Chris. Slide 13 notes upcoming investor events in which we will be participating. Before we close, I wanted to note that I will be transitioning to a new position as President of our Sweet Foods and Dairy products group in ADM Human Nutrition business. I will be transitioning my investor relations role to Vikram Luthar, who will also continue to be the CFO for our Nutrition Business. I'd like to thank our analysts and shareholders for all their insight and support over the past three years. And as always, please feel free to follow up with me if you have any questions. Have a good day. And thanks for your time and interest in ADM.

Thank you for your participation. This concludes today's conference call. You may now disconnect.