Greetings, and welcome to Nutrien's 2024 First Quarter Earnings Call. I would now like to turn the conference over to Jeff Holzman, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to Nutrien's First Quarter 2024 Earnings Call. As we conduct this call, various statements that we make about future expectations, plans, and prospects contain forward-looking information. Certain 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, Nutrien's President and CEO; and our CFO, Pedro Farah, for opening comments before we take your questions.

Good morning, and thank you for joining us today to review our first quarter 2024 results and the outlook for our business. Nutrien delivered adjusted EBITDA of $1.1 billion in the first quarter, supported by improved crop input margins, increased fertilizer production, higher sales volumes, and lower operating costs. Nutrien Ag Solutions adjusted EBITDA of $77 million was well above the prior year, driven by strong grower demand and a normalization of margins in North America. Retail crop nutrient sales volumes were up 17%, and per tonne margins increased by more than 15% compared to the compressed levels in the first quarter of 2023. We continue to grow our proprietary crop nutritional and biostimulant gross margins through differentiated product offerings and expanded manufacturing capacity. These high-value products enhance margins for Nutrien and improve quality and environmental performance for our growers. Gross margin for crop protection products increased by 12% in the first quarter as margins in North America recovered to normalized levels. We continued to see pressure on crop protection margins in Brazil due to the persistence of high inventory levels in the channel. We reduced our crop protection inventory in Brazil by approximately $150 million over the past 12 months, and we'll continue to tightly manage purchases as the market stabilizes. Our Australian retail business delivered strong results and was a significant contributor to our first quarter retail earnings, highlighting the advantages of serving growers in diverse geographies. First quarter earnings for potash, nitrogen, and phosphate were down from the prior year due to lower benchmark prices. However, our results reflect progress on a number of operational initiatives that contributed to higher operating rates, increased sales volumes, and lower costs. In potash, we increased production by 15% year-over-year and lowered our controllable cash cost of production to $56 per tonne. We continue to advance automated mining initiatives that are providing safety and productivity benefits for our operations. North American potash sales volumes increased by more than 50% compared to the prior year supported by low channel inventories and more normal buying behaviors. We achieved this volume growth by flexing our granular potash production capability and leveraging our extensive North American distribution network. Offshore potash sales volumes were up 18% in the first quarter, driven by strong demand in key international markets and improved supply chain performance. We increased nitrogen and phosphate production despite some weather-related outages, leading to higher sales volumes compared to the prior year. We adjusted our nitrogen production mix to optimize margins, resulting in increased downstream sales of urea and nitrogen solutions in the quarter. To summarize, we are encouraged by the strength of demand and continued market stabilization that we saw in the first quarter. Our results demonstrated the capabilities of our flexible, low-cost production assets and downstream distribution network to efficiently supply crop inputs to growers around the world. Now turning to the market outlook for the remainder of 2024. U.S. corn and soybean planting has progressed in line with historic average levels and fertilizer application rates have been strong. Wet weather has recently delayed field work in some parts of the Corn Belt. And combined with production concerns in other key global growing regions, has provided support for crop prices. In Brazil, crop margins for the 2023 planted crop were compressed, which impacted grower sentiment. Prospective soybean margins based on 2024 prices and projected input costs are currently well above 2023 levels, which is anticipated to support Brazilian planted acreage and crop input demand in the second half. Global potash supply and demand is relatively balanced to begin 2024, and we maintained our full year global potash shipment forecast of 68 million to 71 million tonnes. North American demand has been strong, and we believe distributors will attempt to end the spring season with limited inventory, which would support healthy engagement in the second half. Brazilian potash demand has strengthened in the second quarter, and prices have increased by approximately $30 per tonne over the past three months. We have seen good movement to Southeast Asian markets to start the year supported by lower inventory levels and favorable economics for key crops such as palm oil and rice. Standard-grade potash prices in this region have recently softened due to a seasonal lull ahead of anticipated contract settlements. In China, there has been a step change in potash consumption, reflecting strong affordability and as part of a long-term strategy to increase domestic food production. China potash consumption increased by around 2 million tonnes in 2023 to over 17 million tonnes. At the same time, China's domestic potash production declined by around 1 million tons. We believe these factors are behind the push to maintain higher port inventories and an increase in strategic reserves. Global nitrogen markets have fluctuated in 2024, driven by seasonal buying patterns, production outages, and uncertainty over Chinese urea export restrictions and India's import requirements. The U.S. nitrogen supply and demand balance remains relatively tight, in particular for ammonia and UAN, with net nitrogen imports down 21% on a fertilizer year basis compared to the historical average. We expect in-line nitrogen prices to remain firm through the spring season and then follow the typical seasonal reset for summer fill. North American gas prices are advantaged compared to Europe and Asia, and based on the forward curve, we anticipate this favorable position to continue on a multi-year basis. I will now turn it over to Pedro to provide more detail on our guidance assumptions and capital allocation plans for 2024.

Thanks, Ken. As highlighted in our news release, we have maintained our 2024 retail earnings and fertilizer sales volume ranges as market conditions and operational performance have progressed in line with our previous expectations. For retail, our full year adjusted EBITDA guidance is unchanged at $1.65 billion to $1.85 billion. The midpoint of this range represents an increase of approximately $300 million compared to 2023. Our outlook includes an expectation for increased crop nutrients volumes and margins for our North American retail business in the first half and improved crop input margins in Brazil during the second half of the year. In April, we initiated a process to divest our retail assets in Argentina, Chile, and Uruguay. This region accounts for approximately 3% of our global retail sales and around 2% of adjusted EBITDA. The decision reflects our focus on core geographies and actions that enhance the quality of our earnings and cash flow. Our 2024 retail guidance reflects a full year of earnings from these assets as we currently do not have a timeline for completion of the divestiture. We maintained our annual potash sales volume guidance range of 13 million to 13.8 million tonnes and expect a more even split between first and second half compared to 2023. We have taken proactive measures ahead of potential Canadian rail import strikes, but if a labor disruption occurs, we could see an impact on second quarter sales volumes. Our nitrogen sales volumes guidance remains in the range of 10.6 million to 11.2 million tonnes. At the midpoint, this represents an increase of approximately 500,000 tonnes compared to last year, with the majority of this growth planned for upgraded products such as urea and nitrogen solutions. We benefited from lower North American natural gas prices in the first quarter as we were likely hedged coming into the year. With the softening in prices during the first quarter, we saw an opportunity to handle a portion of our North American natural gas requirements for the remainder of 2024. Total planned capital expenditures of $2.2 billion to $2.3 billion is projected to be down $400 million compared to 2023. This total includes investing in capital initiatives that drive organic growth in retail and operational improvements in potash and nitrogen. The focus in retail is to further expand our proprietary products portfolio, drive retail network optimization, and enhance our digital capabilities. In addition, we will continue to evaluate tuck-in acquisition opportunities in North America and Australia. The majority of planned investment capital in our operations are related to mine automation projects in potash and the completion of low-cost brownfield expansions in nitrogen. These investments support the achievement of our mid-cycle sales volume growth scenario and improve the efficiency of our operations. Back to you, Ken.

Thanks, Pedro. To reiterate, we continue to see strong demand for crop inputs and increased market stability. We delivered solid operational performance in the first quarter and are maintaining our full year retail earnings and fertilizer sales volume guidance ranges. Our focus remains on 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 12, where we plan to further outline our strategic priorities and capital allocation plans. Registration is open on our website, and we hope to see many of you in person that day. We would now be happy to take your questions.

Your first question comes from the line of Joel Jackson.

Your midterm guidance says you can get to over $1.9 billion retail EBITDA guide, mid-cycle commodity prices. Assuming commodity prices stay where they are now, is that something you can get to in 2025? What do you have to do this year in the business to perceive that? And obviously, you're going to see a 2% or 3% reduction maybe next year if you do sell the non-Brazilian South America retail assets?

Thank you, Joel. We have discussed the mid-cycle situation, particularly regarding the normalization of margins and the growth of proprietary products in retail. We project that our retail business will contribute between $1.9 billion and $2.1 billion in EBITDA, which supports the 7 to 7.5 million mid-cycle target we mentioned. Regarding prices, we can analyze them by commodity, but generally, we are quite close to mid-cycle pricing for several products. Some nitrogen products are slightly lower, and this can vary by region for potash. Additionally, volume is important; our brownfields and reliability projects in nitrogen could add 1.5 million to 2 million tonnes, aiming for a total of 12 million tonnes, contingent on improved gas reliability in Trinidad. We've also invested in increasing potash capacity by 1 million to 2 million tonnes over the mid-cycle. Combining all of this, we believe we can achieve $1.9 billion to $2.1 billion in retail, with some added tonnes in nitrogen and improved gas supply in Trinidad leading to 12 million tonnes of nitrogen stabilization, along with extra tonnes in potash, resulting in our mid-cycle estimate of 7 to 7.5 million.

Your next question is from the line of Mr. Andrew Wong from RBC Capital.

So potash demand in China looks like it may have taken a step change last year. Your peer, Mosaic, also said something similar to your commentary. So what do you think is driving that growth? They've recently introduced more into the market, could that be driving yields and demand for more potash? And just given that pretty positive view on China, the demand in China will be stronger than the guidance that you have in your global outlook.

Thank you for the question, Andrew. Yes, we believe that food security in China is a key factor driving this change. The Chinese understand the benefits of potash for improving yields, plant health, and disease resistance, and they have been increasing their consumption. Moreover, with a strong emphasis on domestic food security, we are noticing similar trends in export volumes for other fertilizer crop nutrition. While there is certainly a focus on domestic food production, I’ll turn it over to Jason Newton to provide more insights on this topic.

Andrew, Ken accurately highlighted the concerns regarding food security. Looking back about eight years, we noticed stagnant demand growth for nutrients in China, which led to plateauing crop production. Since 2020, Chinese grain supplies have been significantly below demand, resulting in high import volumes. In response, the government has prioritized increasing production. We have observed strong demand for nutrients in China, with a significant increase in potash in 2023, alongside a 7% rise in urea consumption and growth in phosphates. This boost in nutrient demand is aimed at enhancing crop production and returning to the historical growth trends in China.

Your next question is from the line of Jacob Bout from CIBC.

Wanted to get your thoughts on the growth in potash volumes both in North America and globally. And I guess, barring a strike in North America, first off, the strength you saw in the first quarter, does that extend in the second quarter into the second half? Maybe just talk a bit about your thoughts on end market inventory levels. And then internationally, Belarus and Russia clearly ramped up at or exceeding prewar levels. Do you expect them to be much more competitive as you move through the year?

Jacob. Yes, regarding growth in potash in North America and globally, I will let Mr. Tarsi speak. Jeff Tarsi, our Head of Retail, has shared insights on what he's observing in the field, which is mainly due to starting the year with very low inventories and strong application rates. I’ll turn it over to Jeff. Earlier this year, we anticipated a recovery globally, and that’s what we are witnessing. Now, I’ll let Mark discuss the global aspect. On the volume side, we are indeed observing an increase in market volume. However, in terms of competitiveness, we are facing a higher cost to serve. This relates to the Belarusian volumes with the complex port facing delays, which we estimate adds another $40 a tonne, alongside Belarusian volumes transported by rail into China, likely increasing costs by about $20 a tonne on a delivered basis. We could discuss shifting trade flows and potash redistribution globally, but we believe it's leading to elevated costs to serve. Now back to what we’re seeing in North America, Jeff.

Yes, Jacob, thanks. And if I look at the North American market in the first quarter, back to the fourth quarter of '23, we saw strong demand in the fourth quarter. We continue to see strong demand in the first quarter as well. And as I look at it across, really the U.S., I think pricing is attractive to growers. And I think that we've seen some really strong rates. That's not surprising because we pulled a very large crop off in '23. So we had a lot of replenishing to do. And I know as well as we go forward, we're expecting our volume to be up on a full year basis and our margins to be up as well on North America on a full year basis. With that, Mark, I'll hand it over to you.

Yes. Thanks, Jeff. Jacob, so maybe I'll just come back to the top on your questions and kind of some of the messaging that Ken provided. I think first, if you look at the global picture, the most important factor here is that not a lot has changed in our view over the last 3 months. So we continue to see a very balanced market from a global perspective in 2024. As we've said, our view of global shipments in 2024 remains unchanged at 68 million to 71 million tonnes. On the demand side of the equation, we continue to expect about 2 million tonnes of growth over last year. And we see that coming from the same markets that we've been talking about. The biggest contributor to that being Southeast Asia and Asian markets outside China and other shipment gains coming in Europe, India, and Latin American markets outside of Brazil. On the supply side, not a lot has changed there either from our initial view coming into the year. We expect that 2 million tonnes of growth to be met from Canada and Laos, and we'd see that sort of being split about 50% coming from the FSU and we've seen a little bit of variability month-to-month in the supply out of the FSU, but I'd say largely consistent with our expectations. And then that other 50% being balanced between Canada and Laos. So I think to reiterate, overall, with lower price volatility, attractive price levels relative to nitrogen and phosphate, and just a more normalized supply/demand balance and environment. We've seen the year start strong from a shipment perspective. Yes. I think back on your question about starting Q1 strong. I think as we said in our commentary and have talked about today already. We see that first half, second half balance being more evenly split this year. So we had a historically strong fill program in North America in Q1, one of our stronger in the last 10 years. And I'd say what we're seeing seasonally, to pick up on Jeff's comments, in Q2 is strong demand at the retail level and grower level. And those tonnes are really going to ground in progress with planting activity, which is about an average pace. So we're watching weather closely, and if the weather cooperates, we expect it will be a fairly normal second quarter. So overall, we're encouraged by what we see.

Your next question is from the line of Ben Isaacson from Scotiabank.

Congrats on the quarter. Ken, in your press release you called out twice actually about enhancing the quality of our earnings and free cash flow. Can you talk a little bit about what that means, how do you define quality? What is the strategy to achieve this? And is the sale of these noncore assets in LatAm ex Brazil, is that part of that?

Yes, absolutely, Ben. And we do intend to talk more about exactly that at Investor Day. But when we say quality of earnings, it is something that we talk about as being sustainable. And that's, hence, the focus on reliability in nitrogen. You'll have seen that we took, I would say, somewhat painful outages at our Borger facility last year. And because of some reliability concerns, that's paying dividends for us today. We have changed our operating model at Trinidad so that we can optimize utilization when it's available. That's paying dividends for us. And you see that reflected in our operating rates in the first quarter this year, and we're going to seek to focus on that and continue and make that a ratable thing for shareholders. You see us making investments in mine automation in potash, and really, that is obviously a safety benefit, but there's a productivity benefit as we continue to expand our underground footprint that we're focusing on that cash cost of production. You saw in the first quarter at $56. That's quite a competitive outcome. And we're going to continue to focus on that. And the example that you provide on Argentina is a great one, Jacob. Where it's a stable business, but with the currency controls and the macroeconomic environment there and for something that represents 3% of our retail sales, 2% of retail EBITDA, it really is focusing on quality of earnings, but our ability to convert to cash as well because we know the ultimate importance of cash. So focusing across the network, maintaining conviction around capital allocated priorities, and we can talk about the things that we're doing in terms of proprietary products, network optimization, and digital investments, those investments are returning high-quality earnings proprietary products with its $1 billion in gross margin contribution in 2023 and a 15% 5-year CAGR on our proprietary products, these are very high-quality earnings that we can also convert to cash. So I just said a number of things there, Ben, but we'll talk more about that at Investor Day, but really, those are the types of things that we're just absolutely focused on to have ratable high-quality earnings that we can convert to cash because, of course, we know the importance of cash.

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

I would like to explore the potash segment further, specifically the timing and geographic distribution of shipments for the remainder of the year. Given your sales performance in the first quarter, it seems there may not be much growth potential left. I recognize you had a strong fill program in North America during the fourth quarter and third quarter last year, which will likely be difficult to replicate this year. Additionally, Canpotex's sales mix to other parts of Asia, which is expected to drive global demand growth this year, has declined compared to last year. Could you provide insight into how we should anticipate this progression throughout the year? Is it likely we will finish the U.S. and North American seasons with depleted inventories, potentially leading to another solid fill program in the second half, or is there a risk that this situation might result in weaker domestic wholesale shipments for the rest of the year?

Yes. Thanks for the question, Adam. So yes, we are maintaining our guidance with the midpoint of 13.4 million tonnes. And that's because when we look out into the balance of the year, yes, there's a risk of strike and those sorts of things. But as we go market by market, and as we see what's happening on the ground, we have maintained that guidance range. And by the way, that does include some strike risk as well. But I'll hand it over to Mark here to maybe talk through to what we're seeing region by region.

Thanks, Ken. Adam. So look, I think maybe just again to start at the top, as I mentioned earlier in the call, we see that first half, second half split being relatively balanced and even this year. And so again, on the first half, we see a very strong fill program in Q1 and continuing to see good demand in Q2, but we see that being a relatively normal half picture, assuming that weather cooperates. I think if you step back and you look at kind of the total picture in terms of offshore shipments for us and domestic, I think a 35% domestic, 65% offshore is a good way to think about the business for the full year. And there's nothing that we've seen that would change our expectations around that. If you zoom in on a couple of markets in terms of how we've started the year, just to get to your question on geographic mix, we saw very strong granular demand to start the year. And so Brazil has been a very strong product. And as we just talked about, North America has been strong as well. And so when you're looking at those end market shipments and the proportion of offshore shipments, certainly granular markets have started off on a stronger foot. I would say in Southeast Asia that shipments are up to start the year over last year, which is very important, because we see that as being the single largest contributor by market to the growth in global demand this year. And I think as we move through the year, our expectation is that as we see even one of the international contracts get settled, and we expect that India would be first. We'll see further momentum in demand Southeast Asia, which should provide firming and standard grade demand and potentially some firming and price stability in those markets moving into the latter part of the year. I think just to finish off on North America and your question on inventories, I think you've heard Jeff talk earlier in the call about the position that Nutrien Ag Solutions is taking. And I'd say that's very consistent with the rest of our customers. Demand has been very healthy for potash in North America this spring for the reasons that we talked about. But our expectation is that the channel is going to attempt to end the season very empty or as empty as they can. And so again, we think that's very healthy and normal. That's a return to normal behavior in the buying channel. And so we think, again, that would set us up for second half demand in North America that would once again be healthy, given all the factors that we've talked about. So I think you step back from that, in the North American market, we'd actually expect a market size in North America quite similar to what we saw last year. So all of those factors, again, point us to the fact that the market is playing out largely as we had expected so far, and we're encouraged by the stability we've seen.

Your next question is from the line of Steve Byrne from Bank of America.

I have a couple for Jeff Tarsi. Last fall, I believe your business had a significant amount of sampling and nutrient testing. And my question for you is, with a strong fourth quarter and first quarter application, would you assess nutrient levels in all of the regions where you have a retail business? Is it back to more normal fertility levels? Or do you think there's more to go here after a couple of years of below normal applications? And then just secondly, if you would comment on how you would rank the levers that you can pull to drive the EBITDA growth in retail? Is it more U.S. bolt-ons? Or is it more on your proprietary side of crop chemicals, seed, and biologicals?

Thanks, Steve, and good morning. Regarding your question about sampling, I've mentioned this before. For many years, we've tried to determine the percentage that is art versus science. Currently, I would say that 90% of our applications are based on science from soil samples. We had extensive sampling last fall, and we saw a good early start this year. The first quarter also showed strong sampling. I believe we're returning to more normal buying patterns, which Mark also touched on earlier. From our growers' perspective, we continue to achieve high crop yields. When we have high yields, we replenish the soil with nutrients. I anticipate that we'll get much closer to normal compared to two years ago when high prices deterred some growers. As I mentioned earlier today, I find the current prices attractive for growers, and I expect a healthy application season in line with USDA's forecasts for crop yields in both North America and Brazil. In retail, we have various strategies to implement. My main focus is always on organic growth, as it's one of the easiest goals to pursue. We're working hard to expand our seed portfolio, which presents further opportunities. We also have significant potential across our Loveland products line, which is a valuable platform for our retail organization. So far this quarter, we've seen our Loveland product margins increase globally by just under 8% and by over 14% in the U.S. Our segment is growing at a double-digit pace, and we are excited about what this growth can offer. Additionally, our crop protection margins are also strengthening. We will share more about our plans for growing our proprietary business in international markets without retail presence during Investor Day, which is very encouraging. Ken mentioned network rationalization, and we continue to work on that by closing production plants and enhancing efficiency. We are also looking at strategic, opportunistic tuck-in acquisitions, which have proven successful for us, particularly in North America and Australia. Lastly, expense management is always a priority for us. I hope this addresses your questions, Steve.

Your next question is from the line of Michael Tupholme from TD Cowen.

You spoke earlier in the call about numerous operational initiatives within your fertilizer segment is benefiting the quarter's results. Can you provide an update as to where you're at with some of those improvement initiatives? And what you're still working on and how we should think about the impact on costs in potash and nitrogen specifically as we move through the balance of the year?

No, definitely, Mike. Thank you. So yes, I'll hand it over to Trevor to just provide an update on, one, the reliability work that we've done, but then also the status of brownfield investments that we're making to add capacity. And then maybe Chris Reynolds to talk about mine automation. But the other work that we're doing at our operations to reduce costs, as an example, we increased our cut by automation by 40% last year. So we are certainly on a journey here to move to full autonomous mining, which again contributes to costs and productivity in addition to safety. But Trevor, over to you.

And thanks for the question. Just a couple of things, and I'm going to take you back to our Q3 earnings call last year when we really talked about some of the challenges we had and some of the more specific actions were taken to really drive both reliability improvements as well as reliability-type activities across our fleet. Primarily focused on Trinidad and Borger, as we talked about last year, and really happy to be able to talk to the fact that as a result of those actions that we took last year, and Ken mentioned that earlier on in terms of when it is responses, is we did see a step change improvement in terms of both capacity utilization with respect to our Trinidad asset. And that really is related to the availability and how we utilize gas at that facility as well as, again, Ken mentioned, we did invest some money. We took the time and invested a significant amount of energy into our Borger facility, and we're really starting to see those pay off in terms of in 2024. We also talked about a little bit in terms of, as Ken mentioned, while we did see some minor weather impacts this year in terms of earlier Q1. Again, the focus we put on winterization really set our assets up for success here late last year, again, really paid some dividends in terms of where we are. So a simple example, if you look at just in terms of our strategy in Trinidad, we are operating at about a 10% increase in terms of overall gas utilization, capacity utilization, which is a big step change. So in terms of the debottleneck side with respect to some of our side, we did complete several smaller debottlenecks in Q4, late Q3, early Q4 of last year, primarily at Geismar and a little bit of Borger. And those, in combination with the reliability items that I talked about and Ken mentioned, are going to add about a little over 1 million tonnes over the course of the next several years in terms of capacity and reliability additions. So with that, I'll pass it over to Chris for some comments on the potash side.

Yes, Mike, thanks for the question. And as Ken mentioned, we've been really pleased with our progress in terms of the automation of our mines. We saw a significant increase in the cut that we achieved in 2023 compared to 2022. And we've seen the progress continue here in the first quarter as well. And that's one of the benefits when you have low-cost, low-emission mines across our network, and we spread that automation across the six conventional underground mines. The learnings that you can get across the network, which accelerates that performance and that experience. And so that's one of our main areas of concentration for improving our cost. But then there are numerous continuous improvement projects we have, again, spread across that network of six mines. And so the biggest one is the automation, but then there's a number of other smaller continuous improvement projects we're focused on as well.

Your next question is from the line of Vincent Andrews from Morgan Stanley.

I would love to hear your thoughts sort of on the reconciliation of the nitrogen market year-to-date in particular, in North America, just sort of how you think through the movement in prices recently with the sort of factual data on the reduction in imports year-to-date versus normal. So I would just like to hear your thoughts on how and why that played out and also what you think the shape of the rest of the year will look like.

No, that's good, Vincent. Thanks for the question. There are a number of moving parts there to be sure. I'll hand it over to Jason Newton to talk about sort of the macro and the fundamentals in the near term and then over to Mark to talk about the market.

As I mentioned, the nitrogen market differs product by product. In nitrogen, we've seen various movements throughout the year to date. If we look at ammonia to start, and that's where you mentioned, if we look at the U.S. trade balance, the ammonia market has been tight. We saw early strong spring ammonia applications in the U.S. And those two factors led to, in combination with production outages in the U.S., led to tight supply and demand from ammonia and support for U.S. ammonia prices. In addition, if we look globally, the trade east and west of the U.S. has been impacted by challenges in shipping to the Red Sea. And so shipments from the Middle East to various markets have been affected by that. And so to some extent, we've seen stronger ammonia pricing than we would have expected through the year, it's relatively flat overall. The urea market, I'd say we'd see relatively normal price seasonality. We started the year relatively strong. And you can see, if you look on Slide 26 in our deck, of the three major nitrogen products, the urea trade balance has been most balanced in the U.S., and that, in our minds, is evidence that buyers are proactive in positioning themselves. And we have seen in the last couple of applications and planting progress has slowed with the weather that we've seen. And so that, combined with weaker-than-expected Indian results, the anticipation of Chinese supply, which has been kind of on and off and some uncertainty there in terms of when that supply will actually be available, that's put some pressure on urea prices, which at this time of year, Northern Hemisphere demand is wrapping up and the time to get it into the market is drawing to a close. It's pretty normal. And just to finish on urea, we do see that prices have moved seasonally lower. But market prices within North America have maintained a large premium to the important benchmarks, which is typical for this time of the year.

Yes. And Vincent, it's Mark. Thanks for the question. Jason covered the macro really well. So maybe just talk for a minute about what does it mean for us? When we look at our total expected mix for Q2, we would anticipate about 60% of our nitrogen volumes going to the ag market and the remaining 40% going to industrial customers. As we've talked about many times, that industrial volume is either under contract or linked to formula pricing. And so really, when we're talking about what's left for us, it's in the ag order book. And today, we would be about sold across all products for the second quarter. And we did layer in a decent portion of this volume before we saw more volatility at NOLA and urea. I think just to pick up on one of the points that Jason mentioned, in our business, when you look at pricing dynamic for urea in North America, inland pricing has helped maintain more stable premium levels due to tighter supply-demand balances in those regions. And this is a point where the geographic mix of our business, the location of our plants, the product mix flexibility that we have really is a benefit. And of course, as Trevor just talked about, enhanced reliability and completion of the brownfield is giving us flexibility to move between products and really optimize margins in these more volatile environments. And so, as Jason said, we do expect a typical post-spring reset for our business, but this positioning of our tonnes and how we've approached the market has probably provided some buffer versus the volatility we've seen.

Your next question is from the line of Christopher Parkinson from Wolfe Research.

This is Harris Fein on for Chris. Just a quick one for me on the retail side. Maybe if we can just discuss a little bit more how the regional performances are kind of stacking up against each other, U.S. versus Australia versus Brazil? And what you're hearing on the ground in each region that maybe differs from the others. And then on the U.S., just any concerns you might have on U.S. farmer profitability in the context that we've been hearing that maybe they've been a little bit slower to monetize the crop and there's a little bit more than normal on-site that they're holding on to still, if you can just touch on that.

Yes, this is Jeff, and I'll address those questions. Firstly, I would describe the first quarter from the Nutrien Ag Solutions perspective as quite typical with solid results. I was particularly impressed that our EBITDA increased by $100 million year-over-year, reflecting a return to strong margins in fertilizer volume. Additionally, our chemistry showed significant recovery and is performing at or above historical levels. Looking at performance across different regions, North America had a strong showing, despite limited activity in Canada during the first quarter. Australia's performance was consistent and aligned with our expectations for the quarter. We have noted before that the recovery in Latin America, especially in Brazil, is progressing more slowly than many had expected. We still anticipate some recovery in the latter half of the year, although most of our suppliers indicate that a more substantial recovery may occur in early 2025. Overall, I am extremely pleased with our performance in North America, find Australia very consistent, and note a slower recovery in Latin America.

I think it's fair to say, Jeff, that in terms of the health of the grower, we're coming off a couple of good years here where balance sheets continue to be strong. On the farm, and we've seen some strengthening in corn, soybean prices over the last week, given some weather concerns, and crop input prices are competitive. Obviously, they have come off. So while affordability and margins aren't what they were a few years ago, they're still going to be a relatively good year.

Yes. In the very southern part of the North American market, we anticipate some shifts in crop production, particularly with a projected corn acreage of 90 million acres. We are observing a notable transition to soybeans in that region, but we expect normal conditions across the Corn Belt areas. Significant changes in acreage are uncommon. Recently, we've seen a recovery in commodity pricing, which is fortunate as we are actively applying inputs across these acres. Our growers have experienced a robust agricultural environment for the past three to four years, leading to extremely strong balance sheets. Early indicators from the first quarter suggest that growers are actively investing in the necessary inputs to cultivate a successful crop.

Your next question is from the line of Richard Garchitorena from Wells Fargo.

Nice quarter. So just maybe to the retail business. I was wondering if you could just give us some color on what you are assuming for the year in terms of crop protection volumes and pricing. We've heard from your crop protection peers that pricing is going to be down year-over-year? And then in terms of the volume recovery, what are you expecting, embedding in your forecast in the back half of this year? And then just on a related note, pricing in general. You talked about nitrogen and what you're seeing on the supply/demand side. On potash, are you assuming flat pricing in the retail business as well?

Yes. So I'll quickly hand it over to Jeff. I mean, you'll have to go differentiate between what we're seeing in North America in crop protection, certainly in Brazil, where lagging, and we still see a lot of high-priced volumes in the channel. But yes, Jeff, over to you on crop protection and then maybe a few words about potash from a retail perspective.

As I mentioned earlier, I am encouraged by the recovery in our margin rates for crop protection in the first quarter. Globally, we saw an increase of about 300 basis points quarter-over-quarter in crop protection margins, with even more significant variance in the North American market. However, from a revenue standpoint, we were slightly down, around 4% for the quarter, largely due to lower-priced glyphosate. In terms of volume, it remains fairly consistent. We've worked very hard, especially in a high-interest rate environment, to reduce our inventory. Currently, our total inventory is just under $1.5 billion, evenly split between crop protection and fertilizer, which positions us well to maintain low inventories on our balance sheet. This should provide us with favorable buying opportunities in the fall. I previously noted that the crop protection situation in Australia and North America differs from that in Latin America, particularly Brazil, where crop protection remains a significant challenge. However, I am pleased that we have reduced our crop protection inventory there by about $150 million, leading to an overall inventory reduction of $300 million. We are working diligently to improve our inventory position, and we expect a recovery in crop protection margins as the industry achieves similar inventory levels. Regarding pricing, we anticipate stable conditions in the potash market. If we achieve the crop yields we expect this year, we should see strong demand in the fall.

Your next question is from the line of Steve Hansen from Raymond James.

I'm just curious here, sticking to the theme of reliability. I'm curious how you feel about the resiliency of your logistical export capabilities. I recognize you can't control strike actions, of course, across your supply chain, but including one that might come this month. But I am thinking just a hit the last fall, the strike in logistics last year. You've often talked about export valves in the U.S. Gulf in the past. Is that still an idea you want to pursue? And just any broader commentary around how you think about that reliability export network.

Thank you, Steve. Thanks for the question. And I would say for the things that are in our control, we feel very good about the resilience and reliability of our network. And in fact, we would consider it to be the most extensive and competitive in the world. And that is obviously our load-out capabilities at our mine sites. It is our capabilities across our network in North America, nitrogen network. It's our capabilities right through warehousing trucks into our customers in North America and then offshore through terminals, as you say. And with Canpotex, we do have access to multiple terminals. Obviously, the main one is on the west coast of Vancouver, and we send our volumes through various terminals, but we spend a considerable amount of volumes through ports located in locations as well. And in fact, while that's a long journey by rail, depending on what's happening in the Panama Canal, that is a great outlet for us for the East Coast of Latin America. So we do have optionality, and we have that optionality as well for ports off the Gulf Coast. And we have used, in fact, used those terminals, including our own in North Carolina. And so we continue to maintain that option. And we believe that we've proven that so that when we do have these things that are out of our control, we can through that value chain, pre-position product, fill the channel to the extent that we can, and minimize the impact of the things that are out of our control. We've proven that time and time again. Indeed, that's the work that we have done today in preparation for what might be over the coming weeks with some of the challenges with rail. So we'll see about that. But hence, maintaining our guidance range, including some of those things that are out of our control because we have that extraordinary and extensive and competitive network.

Operator, we have time for one more question.

Your last question is from the line of Edlain Rodriguez from Mizuho Group.

Just one quick one. I mean I know for you guys, we don't think the potash contracts with China and India are as important as they used to be in the past. But somehow they still loom large in our mind. Given the recovery in the you've seen in the global market, would you be disappointed if those contracts settle at a lower price than the prices that they have now?

Yes. We're watching those markets closely. Obviously, Edlain, thank you for the questions. Those are standard-grade markets. And you're right that while we have sort of reduced reliance on those contract markets, particularly China. It is also true to your point that we've seen a bit of a seasonal pause in standard-grade markets as some of the other spot markets for standard-grade watch the contract process. So I'll hand it over to Mark, who sits on the Canpotex board and is watching the evolution of the inventory levels in the contract markets and how those discussions are going.

Yes. Thanks, Ken. Edlain, yes, I think, again, as Ken mentioned and I mentioned earlier in the call, we've seen really good momentum in certain markets, including some of the standard markets start the year. But again, as you mentioned, while those contracts, particularly China, is less meaningful both from a Canpotex sales mix and just overall global volumes than it was previously, we still think that's one of a number of indicators that will allow standard volume to keep moving throughout the remainder of the year. I think just a bit of color in terms of how we're thinking about those. If you look at India first, in India, shipments vessel lineup are off to a stronger start in 2024 so far versus last year, and we would view the inventory levels in India is actually being below historically average levels. So consistent with what we've said before, we do still think India is going to be the first to conclude an offshore contract, and we see the potential for import economics to remain favorable. We do see the potential that any reduction in contract price. The positive of that would be that, that could be passed along by the government in the form of the maximum retail price, which would again stimulate demand down at the farm level. So when we look at all those factors combined with expectations for a more favorable rainfall, all these factors support our view that we do think there's going to be growth in Indian shipments this year, which would be a positive overall for demand. And then I think just from a China perspective to reiterate some of the points that Ken made earlier in the call, through Q1, we've actually seen very strong shipments to China. And there does appear to have been a step change in consumption and demand that's continued, and that underscores the importance of potash and crop nutrients for the agricultural market there. And with those new higher levels of consumption and lower domestic production, the doubling of the strategic reserve target of 3 million tonnes, we do think that higher absolute inventories will become more normal in China to meet the country's needs. Probably can't speculate on the timing of the contract at this point, but we've seen good demand out of China without a contract, and we continue to believe that our global demand estimate is going to hold for the year.

There are no further questions at this time. I would like to hand the call back to Jeff Holzman for some closing remarks.

All right. Thank you for joining us today, and we look forward to seeing you on June 12 for our Investor Day. Have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.