Greetings, and welcome to Nutrien's 2019 4th Quarter Earnings Call. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. I would now like to turn the conference over to Richard Doni, Vice President of Investor Relations. Please go ahead.
Thank you, operator. Good morning, everyone, and welcome to Nutrien's conference call to discuss our fourth quarter 2019 results and outlook. On the phone with us today is Mr. Chuck Makro, president and CEO of Nutrien, Mr. Pedro Farrar, our CFO, and the heads of our 3 business units.
As we conduct this conference call, various statements we make our 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 current quarterly report to our shareholders as well as our most recent annual report. MD and A and annual information form filed with Canadian and US security commissions to which we direct you.
I will now turn the call over to Mr. Chuck Negra. Thanks, Richard. Good morning, everyone, and thanks for joining the call today. The fourth quarter was the continuation of challenging year in agriculture, driven by geopolitical issues, short term weather anomalies, and other market drivers.
These headwinds virtually eliminated all global growth for crop inputs in 2019 and set back the cyclical recovery we started to see in 2000 18. In the fourth quarter, we experienced another condensed fall application window and associated price weakness. But looking forward into 2020, we expect global ag markets to recover as we move through the year. Overall, we are positive on crop input demand this bring across North America. This is due to the expected increase in ceded acreage, improved cash crop margins, and farmers wanting to catch up on fertilizer applications after the past 3 seasons with a suboptimal window.
The recent US China trade agreement has also improved US farmer sentiment. For potash, we expect a rebound in global demand driven by increases in the US and Southeast Asia with stronger applications in Indonesia and Malaysia. Due to the dramatic rise in palm oil prices over the past 4 months. However, short term shipments to China remain uncertain as they draw down port inventory and the coronavirus has limited product movement. For nitrogen, US prices have shown signs of recovery, and we anticipate strong global demand to provide stability in 2020, despite the recent impact from lower global energy price Nutrien was created to withstand the variances in the global crop input markets that can arise from time to time.
We have the ability to generate more stable earnings than our peers and to make highly accretive investments through the cycle. While still maintaining our ability to capture significant leverage, the higher fertilizer volumes and prices as the markets improve. We captured 650,000,000 in synergies from the merger and continue to execute on our strategic plan. Despite the headwinds experienced in the second half of the year. We also generated significant free cash flow for both the quarter and the year.
The $2,600,000,000 in free cash flow of $4.54 per share, which was supported by a reduction in working capital. Even after excluding changes in working capital, we generated $2,200,000,000 in free cash flow in 2019 or $3.70 per share. Our adjusted net debt to EBITDA was 2.5 times, which is essentially at the middle of our target range, and this is in a year, which we would consider to be near or at the bottom of the cycle. We also purchased over 36 1,000,000 shares in 2019 and continue to be active in the market in 2020. Now let's take a closer look at the 4th quarter results.
Total adjusted EBITDA was up modestly in 2019 due to good results from our retail business solid operational performance, the continued benefit from merger synergies, and a focus on cost control. This more than offset the impact from the significant weather challenges in North America and Australia trade uncertainties and the softening of global fertilizer market conditions in the second half of twenty nineteen. Nutrien's adjusted EBITDA $4,000,000 after accounting for a number of charges totaling $128,000,000 related to M and A activities. The largest of these was about $50,000,000 charge related to the Ruralco acquisition. This will also be the last quarter that items related to the merger will be reported on.
On a business unit basis, our retail Q4 EBITDA was 8% higher in the fourth quarter of 2019, than last year and 2% higher on an annual basis. Gross margins in the fourth quarter were higher year over year across every retail category. North American retail fertilizer volumes in the fourth quarter were similar to last year, but there were significant regional differences. US retail fertilizer sales volumes in the 4th quarter were 20% higher year over year compared to the compressed season in 2018. Farmers in the Cornbark Belt, particularly the Eastern And Southern Corn Belt, were applying fertilizer right up until New Year's.
However, this was fully offset by significantly lower volumes in Western Canada and some Northern US states due to an early winter. We had great success with the launch of our, an adoption of our new digital platform in 2019. At the end of the purchases online in 2019, results that are unprecedented, unprecedented in the ag retail industry. Potash EBITDA was down 62% in the 4th quarter compared to the same period in 2018 due to lower prices and sales volumes and higher per ton cost as we took downtime at a number of our facilities to better match supply with a temporary reduction in global demand. The CN rail strike also lowered earnings by approximately $10,000,000 this quarter.
On an annual basis, 2019 potash adjusted EBITDA was similar to 2018 as higher average selling prices were offset by lower sales volumes. Nitrogen EBITDA this quarter was 19% lower year over year due to lower ammonia volumes and sales prices. The narrow window for applying ammonia in Canada and the Northern tier of the U. S. This fall had a major impact on our volumes and our earnings.
We estimate we lost 110,000 tons of ammonia sales due to an early onset of winter in this very important market. As we have seen before, this will result in an increase in demand for nitrogen product applications this spring. For the year, nitrogen EBITDA increased 2% as lower natural gas costs in North America and higher earnings from our equity investments more than offset lower ammonia sales volumes and lower nitrogen real life prices. Despite depressed phosphate prices in the second half of twenty nineteen, our business continued to generate positive cash margins for both the quarter and the year. Thanks to our product mix and merger synergies, including our decision to convert the Redwater phosphate facility to an ammonium sulfate facility.
While fertilizer markets have started 2020 under pressure, there are several positive factors to consider for the acres to be seeded this spring or about a 6% increase from last year. Almost all of those additional acres will be planted to corn and soybeans. A second positive development is the resolution of the US China trade dispute. While it is uncertain when we will see US agricultural exports rise, There is little doubt it will be a significant improvement relative to the past 2 years. On the on the market outlook for potash, We expect to see strong demand in North America as our potash winter fill program achieved the target the targeted volumes quickly and we were sold out of potash for the first quarter within a matter of weeks.
Go globally, we also expect that the dramatic increase in palm oil prices over the past 3 or 4 months will result in a rebound in potash demand from Southeast Asia after imports dropped in that region by 2,000,000 tons. In 2019. However, we now expect China will not conclude a new contract until sometime in second quarter due to elevated port inventories and the impact that the coronavirus is having on product movement in the country. As a result, we have lowered our 2020 Chinese fertilizer shipment estimate by 1,000,000 tons from earlier estimates. Our new forecast for global potash demand in 2020 is 66000000 to 68000000 tons, which represents about a 4 an increase over 2019 levels.
As such, our sales plan this year is intended to support our customers in these growing markets with our sales anticipated to be between 12,300,000 12,700,000 tons. For nitrogen, we anticipate North American prices will be supported by a surge in demand this spring and lower offshore imports. While this was a tough quarter for the industry, Nutrien stayed focused on our strategic priorities. We were excited to close the Ruralco acquisition and to announce the Australian rebranding uniting all of our global retail operations under the name Nutrien Ag Solutions. We expect Ruralco and other acquisitions made in 2019 to add over $125,000,000 to retail EBITDA this year.
We also foresee strong organic growth for retail, assuming normal weather and seeded acreage. Plus the benefit from ongoing investments in our digital platform and supply chain improvements. We also announced the purchase of Agrosima, an ag retailer in Southern Brazil with 12 farm centers and 200 employees, servicing thousands of farm customers. And we expect more of these types of acquisitions in Brazil in 2020. We will continue to focus on developing our leading position in digital agriculture.
We are aiming to approach $500,000,000 in sales through the digital platform in North America this year. Essentially doubling last year's level, and leading the industry in online revenue generation. We will also be rolling out our sustainable agricultural strategy supported by our climate smart investments. We have invested across the value chain and products, services, and technologies that can make a significant and positive contribution to sustainable agriculture and to our bottom line. This will be a multi pronged approach, including new ag, biological and nature based products, best available carbon reduction technologies, and carbon capture and sequestration, both in our upstream and downstream operations.
This also extends to our new digital tools that help growers make more informed decisions, which encompasses our recent acquisitions of Agrible, in Waypoint. We will leverage these type of investments as we build a company wide sustainability strategy that is integrated into the long term plans for our company. We will be rolling out the details of the strategy along with specific targets later in 2020. We continue to believe our business model will perform well in times of volatility. Our strong cash generation will allow us to grow our operations, while returning capital to shareholders with the focus clearly set on long term value creation.
We are issuing EBITDA of $3,800,000,000 to $4,300,000,000 in 20.20, which assumes a solid growth in retail earnings, but recognizing that fertilizer prices are likely to continue to be under pressure in the first half of the year, given current levels and the lag in price realization compared to coated benchmark price We see 2020 as a year that will start to demonstrate the momentum back towards the path of recovery for global fertilizer markets. Started in 2018. We will continue to remain disciplined in our approach to capital to controlling our controllables, including our investment in production decisions. With that, operator, I'd like to open the call for questions.
Your first question comes from Jacob Bout with CIBC. Your line is open.
My question is on the same store sales for retail. So I think for the year, you're indicating that it's down 1%. But if I remember correctly, your on the 3rd quarter call, you said year to date that same store sales were up 1 a half percent. So wondering what happened in the fourth quarter. And then how does same store sales that you saw, compared to the overall industry?
And is there any nuances here within the fertilizer proceed in in crop protection. Yeah. Good morning, Jacob. So that that number is a a a global retail number. I'll have Mike Frank just dissect it for you because we we've seen good growth in the US and he can answer your questions.
So go ahead, Mike. Yeah. Good morning, Jacob. So when we report on same store sales, as you probably know, it's an adjusted number. So we we adjust for both FX and for, fertilizer price, which last year we had appreciation.
And so on a global basis on the, on the 12 months, we did see a 1% decline. If you look at the U. S. Market specifically, our same store sales adjusted are up about 2%. So we actually had really strong performance in the U.
S. We were down in Canada. As you may know, in Western Canada, we really lost the, fourth quarter window for both herbicide application and and, fertilizer. And so that ended up putting our our same store sales in in Canada. And, so that that's kinda where we evolved from q 3 through to q 4.
And compared to the overall industry? Yeah. We don't have numbers, Jacob, for the industry. So, you know, the the best numbers we have on an industry basis is in the US, again, is our biggest market. We do get point of sale data on crop protection sales.
So we have a really good understanding of the performance of, our business in U. S. Crop protection. And, last year, we saw an increase of about 1 a half share points. Most of that being organic growth.
And so we're really pleased with how our business performed in the U. S. As you will note, it was a, a very tight window once farmers eventually had a chance to to plant their crop, our supply chain and service approach to to our retail network. Really kicked in, and, we saw a significant share increase. And so, you know, I would expect we we led the way in same store sales growth you know, just based on that alone.
The next question comes from Joel Jack with BMO Capital Markets. Your line is open.
I thought maybe we could dive into your 2020 potash guidance a little bit more. Maybe you can help me bridge for 2020. So are you assuming that you're getting some tailwinds here are maybe some lower cost per ton. Are you assuming lower royalties? I know there's different credits that have been, changing the government to change some of the, ability to apply them.
It also seems like you're maybe assuming a $15 to $3 ton potash price increase globally from spot through the year. Can you maybe comment on the different buckets? Thanks. Yes. Good morning, Joel.
So I'll try to give you the best perspective that we have. If you look at our overall guidance, and then we can dive, and have a deeper look at the potash business the lower end of our guidance would essentially have today's pricing moving forward through the year. We don't think that that is a high likelihood, but that is how we we crafted the overall, lower end of the guidance. The upper end of the guidance has, of course, price increases, assumed through the year, but that the overall net pricing would be actually less than 2019. So that's how we get to the the upper end of the guidance.
So then when you when you look specifically at at our potash guidance, certainly, when you look at how we've sold our sales plan, you know, that's based on our view that we're gonna see some decent growth moving from, up from 60 below 64,200,000 tons. That's our guesstimate for 2019, up to 66000000 to 68000000 tons. And that's how we get our volume. So about a 1,000,000 tons of of volume growth that we're assuming. And then when you look at our our cash costs, we we are assuming, a slightly lower cash cost as we continue to optimize the potash network, grow volumes from ropingville.
So that's built into the guidance. And and then the rest is really the market pricing, which we sort of book in for you on a macro level from sort of today's pricing. Through to, slightly less than last year's. We don't wanna get too much more specific than that because I think, that's probably enough said, but we we have, some confidence in in our guidance ranges. I think the biggest wildcard that we have right now in potash is when will the China contract be signed.
And And even that, I think we've taken a fairly conservative route where we believe that the contract won't be settled now until the second quarter. As I mentioned in my prepared remarks, because of the port inventory build, but really because of the disruption from the coronavirus, and not being able to get to the negotiating table or as well as move port inventories, inland. And and we do think that that that's going to have a bit of an impact into the second quarter.
Your next question comes from Ben Isaac with Scotiabank. Your line is open.
Thank you. Good morning. You mentioned some headwinds in your outlook, or at least possible ones, the coronavirus, Australian drought, swine fever. Can you talk about what the kind of puts and takes are on both supply and demand, in your business from each of those. And, and as it stands right now, would you rank those in terms of importance to your bottom line?
Thank you. So look, I I think, the overall guidance ranges that that we've we've set, as as soon as normal weather, it does assume the 14,000,000 acres of of, incremental seeded acreage in the US that that we've outlined. And so I I think that you have to assume that the the sales volumes that we've outlined in our guidance is is key to the overall earnings. There's a there's always a bunch of puts and takes in our industry. That's what agriculture's about.
And and I I do I wouldn't wanna, overall rank them for you because I I don't think that that would be, appropriate, and and we we wouldn't actually have a a great understanding. I wish one is gonna be most disruptive. I think given the situation in ag, when we look at last year versus this year, last year, there was clearly, geopolitical and and the macro backdrop that pressured that not only Nutrien's earnings, but but the entire sector. And the recovery that we saw really nicely shaping up in 2018 there was a reset. And now that now we think that 2020 will be that year of recovery.
But because of the situation of of how low prices went in the fourth quarter, and as well as the the inventory that was filled, some in nitrogen, but also in potash, we think that, we're gonna see the recovery in 2020. We just don't know when. The the coronavirus just to give, some commentary on that. Obviously, we're watching it closely. Nobody really had it for the full impact understood right now.
Where we're seeing that impact is on the contract negotiation with potash, which we've already talked about, but there's also some active ingredients for crop chemistry that are core to to, our our supply chain, but many others that are quite tight right now. Now we have a very good inventory position for that. We don't think that that's gonna impact us for the spring season. You know, African swine fever, I think you mentioned that as well. We we think that the worst is behind us there and that the herd's starting to rebuild.
Certainly, I think when you look at the results for 2019, you are gonna see that green and oilseed demand was impacted because of that but that headwind should become a tailwind as we move through 2020. And then, of course, the US China trade settlement, a major headwind for the last 2 years, But now that the the settlement is agreed to, I know that there's some uncertainty on when we're gonna start to see US agricultural products start to shift to, to China at the higher levels. But we we have confidence that that will happen in 2020. We have confidence that that's gonna be a major tailwind for us. But we don't know exactly the time.
So that we're being a bit conservative because of all of these things, but most of the tailwinds from last year shipped or the headwinds from last year should become tailwinds for for this year.
Your next question comes from Don Carson with Susquehanna Financial. Your line is open.
Thanks. Chuck, you know, up in Canada, you've got a difficult business environment these days, you know, with blockades and carbon tax things like that. Can you talk about what the impact of the current rail situation is on the ability to move product to both export and domestic ports? And then what is, the potential outlook for carbon taxes on Alberta next gen production? Good morning, Don.
So, look, on on the CN rail disruption here in Canada right now, we we do have some car some ammonia card, it's an instant product cards that are caught up in in the slow down. So the situation is manageable for us right now as far from my deal. But we don't send a lot of cars each from our operations. So most of our production of, as you know, is in the west. We we don't use the east that has, core exporting, routes.
So the majority of our exports are gonna be just fine. This is disappointing, though, because we just got through, a rail strike at CN in the fourth quarter. And now we've got this this slowdown in Canada. And so overall, you know, we're watching this situation. We don't think it's gonna have an impact, to our deliveries right now.
But the reliability of the Canadian supply chain is becoming a concern for us.
And that's something that,
you know, we're actively involved with, the authorities to try to help them understand that this will impact, Canadian agriculture and our reputation over time if this stuff continues. The carbon tax, we we we have a carbon tax already in Alberta. And, It's for large emitters, but we have also a lot of, offsets as well. So we have a cogen facility at one of our our operations that allows us to have a carbon tax credit. And we also have a relatively new carbon sequestration operation that has been a fantastic investment for us, and that is helping offset some of the carbon tax.
So what I would say right now is that we're in the new regime when it comes to carbon taxes, certainly in Western Canada. It's something that's been with us for some time. I'd say today, we don't see a significant impact to overall cost. And if we have found smart ways to offset our our carbon taxes by making some, I think, strategic investments, over time. And and we'll watch the situation over time to see how how things progress.
But certainly, right now, we're quite comfortable that the Canadian assets are gonna remain very competitive globally. And in fact, with a co gas related, probably some of the lowest cost production on the planet.
Your next question comes from Andrew Wong with RBC. Your line is open.
Hey, good morning. So I just I do understand, how much excess free cash flow that might be this year. So we took the midpoint guidance, you applied from historical cash conversion. We get about $2,000,000,000 of cash flow, free cash flow, about $1,000,000,000 of that close to dividends. So the billing that's remaining, how much of that it's already tag for gross lending, like acquisitions or growth traffic.
And then how much of that might be excess available for share buyback, stuff like that? Thanks. Good morning, Andrew. I'll have Pedro, our CFO answer your question, and I'll bring I'll I'll have some final comments as well.
Andrew, good morning. Our cash flow this year was, particularly, positive and And I I didn't surprise this. It's not a a a total surprise for those who are working here. We ended up last year pretty high in inventory. As you recall, we we, bought an anticipation of China tariffs last year.
We also had a late season. And, so this year, we did a lot of work to work down the inventory. So as we worked out this inventory, we produced very good cash flow. I think, we, in excess, of course, of of earnings. And we think that the cash flow and working capital can continue to improve.
Of course, there's going to be a lot of puts and takes but we think that we, the efforts we're putting this year will continue to be our fruits in this coming year. In terms of our capital allocation, how much we're going to be using, for different uses? I mean, how about, capital allocation strategy continues to be the same. So, we'll after after we've put back the balance sheet and, we've spent an hour sustaining capital can serve our assets. We're going to be taking a look at everything and our compete for capital business.
We we have a share, buyback program active in January February. And of course, we'll be looking at our digital alternatives for inorganic growth in organic and we'll be making decisions throughout the year. But we think, working capital continues to behave well.
Yeah. And just a few other comments, I think Pedro covered that very well. So no change. We we the company, was built to generate significant cash flow even in market conditions, but we saw last year. I think we've demonstrated that now, and the priorities haven't changed.
Right? We we wanna maintain our investment grade rating. We have a very strong balance sheet. We wanna protect our assets. So from a sustaining capital perspective, we allocate about a $1,000,000,000 to to put back into the assets to make sure that they're safe and reliable.
And then beyond that, then it's a it's a matter of allocating the capital for the best long term growth for the shareholder. And we think that we'll have enough cash to do both, the return capital through buybacks and and increased dividends over time, and to invest through both organic and inorganic investments for long term value creation.
Your next question comes from Christopher Parkinson with Credit Suisse. Your line is open.
Hi guys. This is Lucas Plumbing on for Chris. So I just wanted to go on to retail. Could you give us an update on the ongoing opportunity to further consolidate the North American market given some of the recent large transactions. Do you think there's still the potential for midsize the large acquisitions there, or should we limiting the outflow process to pretty much tuck ins only at this point.
Good morning, Lucas. I'll have my Frank answer the question for you. Lucas, I I think as we think about our opportunities in North America, they're primarily tuck ins, you know, if, obviously, if if a significant retail asset came on to the market. We would we would look at it, of course, but we're always focused on, you know, quality and and value generation for our our shareholders. And so, you know, right now, we have, I think, a pretty solid lineup of tuck in opportunities.
Last year, we acquired over 73 retail branches through our our tuck in program. And I would anticipate in 2020, we'll have something similar in the US, for opportunities as well. Now as you may know, we're also looking at results. So we announced an acquisition earlier this year of Agrosima, and we continue to look for opportunities to really build out the backbone of our retail business in Brazil. So we're also focused on opportunities in that market as well.
Your next question comes from Steve Hansen with Raymond James. Your line is open.
Yeah. Good morning, guys. The target to double your digital sales in 2020 is notable. Can you perhaps describe if there's any changes to the platform over the course of the year that will help pull more farmers onto the platform? And perhaps if it's not too early, just describe whether or not you're seeing any, definitive market share benefits as as a result of the platform.
Thanks. Good morning, Steve. Yeah. We're very excited about the 2020 plan for our digital platform. Mike Frank will walk you through it.
Steve, so we, we turned on our order taking capability on the platform a year ago. And, we turned it on through the course of the first quarter, and we saw a significant ramp up of uptake of ordering online. Finishing the year, which is over $260,000,000 of online orders. We, in terms of changes to the platform, we continue to add more products onto the platform. Last year was primarily crop protection products.
This year, we're adding seed ordering and fertilizer ordering capability onto the platform. And so that will, I think, generate additional revenue. And, we've also added a number of other features to the platform that turning on in 2020. We recently turned on our our crop planning tool, which allows our sales agronomist to sit down with our customers and plan their their farm field by field across all inputs. It it creates insights both for our supply chain.
But it also allows our sales of our enemies to really work with our customers to provide those, you know, full acre solutions, including financing opportunities that we're now financing using Nutrien Financial, which is also integrated into the digital tool. So we're really creating a lot of convenience digital insights from an agronomy standpoint. We're also now exposing field level weather and spring conditions. And so there's a number of, of features that we've added onto the platform at the last half of twenty nineteen and here early in 2020. So our anticipation of, of, you know, doubling our online orders is, is, is, I think, very achievable.
And and we've got a lot of momentum right now. And in that direction.
Your next question comes from Steve Byrne with Bank of America. Your line is open.
Yes. Thank you. A fertilizer buyer in Brazil recently indicated that the potash sales in the Brazil in recent months were were sold only with a price cap, and that the buyers were given 60 days to lock in the price. Which if if this was a practice that was, prevalent, certainly could have contributed to the plunge in pricing in that region. Can you comment on this?
Was was Canpotex involved in this selling practice And if so, do you expect it to continue, you know, after the potash market tightens up? Yeah. Good morning, Steve. I'll have Ken Sykes, head of the potash business, answer your question.
Thanks, Steve. Yes. I I can say that, we have seen some smaller volumes moving in Brazil with, different pricing mechanisms, but I can also tell you that that for the large volumes and the large suppliers, that's not the case, and certainly not the case for Capitex. Capitex has their very well established channels into that country. And you can see the prices at, $245, 250 a ton, with various rebates, depending on volume, But, you know, it's not it's not the case that Capitex is looking at an untraditional pricing mechanisms with their customers into into Brazil.
Your next question comes from Adam Samuelson with Goldman Sachs. Your line is open.
Yes. Thank you. Good morning, everyone. I was hoping to just get a little bit more color on the the potash market outlook for 2020. So at the market level, looks like you're forecasting about a 2 and a half 1,000,000 ton kinda increase in global shipments at midpoint your own sales forecast calls for about a 1,000,000 ton increase, in in sales.
And if I'm thinking about kind of new entrance in the market, I would really think that that there should probably be about 750 a million more tons, of EuroChem production incremental year on year. Given that, do you think that and all the curtailments that took place in the industry in the fourth quarter of 2019. Do you think that that's actually kinda there's enough room for everybody else to see a reasonable recovery in normalization production or do you think that there's more capacity currently come upstream to let the balance of the market. Yeah. Good morning, Adam.
So, I'll just give you a high level perspective on on your question. In here. Certainly, the the setback last year, when we had a reduction because of palm oil prices and then, of course, the US weather impacted before that, we were seeing very good growth. And we had to view that as the market continued to grow that historical rate, it would require more supply and the new entrance supply would would fit pretty nicely into the increased demand. Obviously, in 2019, we had a a reset And and I think Nutrien looked at our sales book and and and we pulled back on our on our sales because simply we didn't have the customer base to support it.
Now when we look at the 2020 plan, now we're seeing, what I would call, respectable growth, another 4% up, from 2019 levels, getting back to basically 2018 levels. And so our our plan is is outlined in in my prepared remarks is but we are going to take our our sales volumes up. And we think that it will be supported by growth in in Southeast Asia. And in North America. China is probably gonna take a little less than they took last year.
But but overall, when I when we look at the sales plan that we put in for we think that the market is gonna need the tons. And we're not sure exactly what others are planning or or could do. But but certainly with the increased market, that we we we see coming in in 2020, depending on when we see a a channel settlement, Our view strongly is that that, our sales plan makes a lot of sense for for us and for our stakeholders. Then we'll just have to see how the rest of the market, moves their tons into into it. We we don't really have a lot of insight on on their sales plan.
Your next question comes from John Roberts with UBS. Your line is open.
Thank you. At your Investor Day last here. You identified some nitrogen brownfield opportunities, both near term and a little bit longer term. Could you give us an update on where your thoughts are on that?
Yes, good morning. I have very excited to walk you through the progress. Yes, thanks for the question, John. At the Investor Day, we identified about 300,000,000 dollars of, spend on about 5 or 6 projects. The first wave of those actually have come in online this year.
So if you look at our forecast volumes, we're expecting to see 100,000,000 tons more product at the sale in 2020 versus 2019. Some of that is ammonium sulfate. That 400,000 tons there. You know, the 700,000 tons is a mix of ammonia and urea. Some of that, of course, is from, less unplanned less planned outages.
Some of it is the first wave of this expansion project have some other projects coming online in 2020. It should be finished out for the, expansions and also the Augusta RioPlan. And so we'll see continued growth in volumes through 2020 1.
Your next question comes from TJ Chukar with Citi. Your line is open.
Yeah. Hi, Chuck. You mentioned your that lower raw material cost in phosphates would be a headwind to a significant market recovery. Are you saying that phosphat prices are unlikely to go up due to lower raw materials? And what's your margin outlook?
Thank you. Good morning, P. J. I have Grace. I'll answer the question for you.
So, P. J, we we think as you know, there's a lot of price decline through 2019 in phosphates We saw ACP and other producers pull back from the US market. We've seen prices come up a little bit. We suspect that they will probably come up a little bit further before, we the importers get back into the market in a big way. We don't think there'll be a large price appreciation.
I think there'll be some The outstanding, I'd add to that when you look at our phosphate business, you gotta remember that, most of the margin these days comes from non agricultural products that we sell. Including on our purified industrial products. Yes. And P. J, one last point is just we did lower our total costs because we converted red water to an ammonium sulfate plant.
We we we did some modest expansions of our 2 phosphate facilities in the US. And and we, of course, we're not buying imported rock anymore for Redwater. So overall, that's what's driven our cost and even in these tough conditions we saw in 'nineteen, we we did have positive margins. And as as Rick said, and most of our product mix is not related to agriculture. It's related to industrial business.
And food applications, which I think, it has more stable margins over the long term. So those two combinations, you know, when we look at our business It it it helps a lot. And and it insulates us a little bit more than from the the kind of the agricultural backdrop that that we saw in 2018 2019.
Your next question comes from Mark Connelly with Stephens Inc. Your line is open.
Thank you. Two questions. Was was all of the increase in ammonia controllable cost related to the turnarounds? And, secondly, some farmers in the Midwest are telling us that soil moisture is too hard, too high. And I'm wondering in the middle of February, whether that's a concern yet But if they do stay too high, how is that gonna affect affect your mix and timing in nitrogen?
Good morning, Mark. Uh-huh. Rafael answered the first question, and then Mike can give you a a view of moisture levels in in in the US and then rates can come back and talk about the impact. Yes. So look, I mean, there's certainly been, I mentioned the expansion projects previously.
There's been a a mix of those plus efficiency work going on with the last turnarounds we've been doing. So we certainly have been focusing on efficiency. Think the majority of the costs have come from lower, lower gas costs year over year. We've seen that in the U. S.
Sorry. What was the same? Well, then I think let the rates, answer the earlier. Mike answered the question on soil moisture condition. Good morning, Mark.
So the way we look at the US right now is from a Midwest standpoint, if you go south to buy 80, you know, I would say soil moisture is good, but not excessive. And, as we talk to our customers throughout that region, they're anticipating you know, getting in the field once it warms up. And, you know, for the most part, it's been a pretty mild winter to a lot of that region. If you go north of of I Eighty, you know, into the Dakotas and Minnesota, Wisconsin, obviously, they they had a really, really winter hit them. Soil moisture, especially in South Dakota, are are still high.
But the ground is frozen. And so, you know, even though they've had, you know, solid, snow conditions, you know, the, the moisture hasn't been added to, I think, over the winter. So look, we're anticipating as we've talked about, you know, another 14 more million acres getting planted in 2020. And, a lot of that over 12,000,000 acres of that is, is corn and beans that are going to go in in the Midwest. And so that's our anticipation.
And as we talked to our customers right now and you look at our order book, our order book for corn feet is incredibly strong, where we're seeing a lot of momentum in corn. And, you know, I would say the bean soybean order book is consistent with our expectation of about 85,000,000 acres of soybeans right now. So That's what farmers are are planning on and anticipating. And and, obviously, we need a, you know, we need a normal spring conditions in order for us to to get those acres planted. And, Mark, just to wrap up with your last point, it's we we don't have any concerns right now on fertilizer applications for the spring season because of the weather or moisture conditions.
It's a little too early to be concerned right now and things look like they're proceeding as we would have expected them to.
Your next question comes from Vincent Andrews with Morgan Stanley. Your line is open.
Hi. This is Jeremy Rosemarie on for Vincent. Thanks for taking my I just wanted to ask, on the potash outlook, looks like versus versus prior guidance, you took the India number down maybe about 450,000 tons at the midpoint, Latin America down about 800,000 Tons and other Asia looks basically unchanged. So just two quick ones. One is just what what drove the changes to the Indian Latin America shipment numbers?
And 2, just given the decline in Tom Oil Price because they're the last call a month or so. If there's just any risk to the other Asia demand member. Thank you. Good morning. I'll have Jason Newton, our Chief Economist answer your questions.
Good morning, Jeremy. On India, the major driver we still expect year over year that we'll see, shipments going into India, possible 500,000 tons. We ended up last year right around, we're expecting about 4,100,000 tons. We think there is some risk of of subsea change in India as a result of lower prices. We'll we'll watch that one for a REIT.
We do expect India to move up. In Southeast Asia, we'd expect, the demand will be, up about 1,500,000 tons. And, yes, palm oil prices have been really volatile, and that's related to the coronavirus. And, but as we look at what the USDA knows you're saying in terms of applying our network. It is tightening significantly.
And and so we think, prices will be supportive as as a result of that. And they're still up about 40% from the low of last year. And so we expect of rebound in that region, although not back up to 2018 levels.
Your next question comes from Michael Piken with Cleveland Research. Your line is open.
Hi. Just wanted to get a feel for, how your retail margins might, look this year and what your expectations are if we can kind of look at it from problems nutrient standpoint as well as, from seed and crop protection in light of, you know, maybe some additional rebating, discounting, you know, going on in the seed markets. And, in the case of fertilizer, you know, some of these prices, particularly UAN and profit may be below, well, work pricing wise during sale levels. Thanks. Good morning.
Mike Frank can answer the question. Yeah, Michael, look, if we kind of go through the, the major categories, from a margin standpoint as we head into 2020. Firstly, from a nutrient standpoint, we were pleased with the performance of our nutrient business last year. Our margin per tons were up $6 a ton across our global retail business. In Q4 and early days here in, in 2020, we're seeing those margins hold.
And so we anticipate similar margins on a per ton basis in 2020 that we, that we delivered in 2019. On CPs, you know, we had a very challenging first half of the year in CP. There was, a lot of inventory that was carried into the, into early 2019. Across the retail network. And then the the market was really slow to evolve.
And, that put a lot of margin pressure And of course, as we reported our first half earnings last year, it was reflected in our, in our margins in crop protection. As we as the year unfolded, we really recovered significantly and we ended up holding our margins, our gross margins pretty flat year over year. So as we as we head into 2020, I would actually anticipate some, positive opportunities on on a crop protection margins. You know, we don't anticipate the, the delayed spring. I think channel inventories, including our own, have drawn down, this time this year versus this time last year.
And that should all be conducive to more regular, you know, levels of competition and, and opportunities for us from a margin standpoint. We also saw, just on the crop protection before I do that, we also saw a little bit of a decline in our mix of proprietary products last year. And again, A lot of that was based on inventory that we had that we wanted to sell the inventories that we had in our in our sheds. And so as we look at 2020, we would anticipate our mix of proprietary products to get back to where we were a year earlier and now it'll also be constructive to margins. Finally, on the seed side, you know, we we are seeing, to date, margins on corn seed.
At, you know, pretty historic levels. And so and with with more corn acres to be planted, that's gonna be good for our seed margins. Soybean seed is, is probably where there's more competition this year. And so we're seeing a bit of margin erosion in our soybean seed business So that I would say that's that's probably the one area that we're we're watching out for. But overall, I think if you if you look at seed on an all in basis, will likely be, you know, in similar margins as we've been historically, especially with, more coordinators coming in.
Your next question comes from Jonas Oxgaard with Bernstein. Your line is open.
Good morning. I was wondering if you could talk a little bit more about Bureau Brazil acquisition strategy in how the integration of the previous acquisition is going. Are we seeing any any synergies out of that so far? Good morning Jonas. Yes.
So Mike Frank can answer the question. So Jonas, as we build out our retail business in Brazil, in the early days, there's not the traditional, synergies that we get in North America or even in Australia because we have a big footprint that we're talking the acquisitions into as we build out our retail footprint in Brazil, primarily we're expanding into new geographies And so there's not significant synergies, you know, from a proprietary product standpoint or from an operational leverage standpoint. That being said, about 18 months ago, we acquired a nutritional business in Australia called Agrichem. And so as we expand our footprint in Brazil, our retail footprint, we do see that as a channel to increase our sales of agrochem products, which are industry leading nutritional products that come with really nice margins and, and customer benefits. And so that would be the one area of synergy.
But again, just to set expectations, as we think about Brazil, we're really building out the the backbone and the capability of our retail network and, that will likely take, you know, the next 2 or 3 years And from that point, as we get that business established, as we tuck in from that point going forward, we'll see more synergies.
Your last question comes from Jeff Zekauskas with JP Morgan. Your line is open.
Thanks very much. In your potash data, you showed that Canpotex shipped about 17% of its volume to China in the quarter. Are those shipments priced at the old 2.90 per ton delivered that the old China contract was under or is there a a different set of prices that are used now? And secondly, Chuck, I think you said that Acquisitions would benefit retail EBITDA by $125,000,000 in 2020. How much did they benefit retail EBITDA in 2019.
Yes. Good morning, Jeff. So I'll have campsite answer the potash question and then we can come back and answer the the M and A question for retail.
Right. So, yeah, with respect to 4th quarter shipments into China, we positioned potash along our entire supply chain at any point in the year. And that's also true for China. And so the volumes that you would have seen go to China would have been provisionally shipped there and headed into bonded warehouses. As you probably know, China, stops additional shipping since that country C imports, at the end of August, yet, CapEx shipped in preposition material.
And it's been participation of strong demand in China in 2020. And so the pricing mechanism for those provisionally volumes will be that they're awaiting a new contract, which is relevant because, in fact, CapEx is not the only supplier so that when we look at port inventories in China and say 3a half 1000000 tons, well, about a 1,500,000 a half a 1,000,000 of those tons now, are awaiting a new contract. And that new contract price will be the price for those, provisionally shipped volumes.
And then just just to answer your second question. So, the impact from the M and A for on 2019 was somewhere between $35,000,000 40,000,000 as you know, we didn't close Ruralco until October. So that was really the the driving difference, I think, between 2019 2000 and in 2020, as well as we we have, several of the other tuck ins that that will start to show benefit in 2020. So answer your question somewhere between $35,000,000 $40,000,000.
And there are no further questions. Thank you, operator.
Questions, investor relations available to take your calls. Thank you.
This concludes today's conference call. You may now disconnect.