Greetings and welcome to Nutrien's 2019 Fourth Quarter Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a remainder this conference is being recorded. I would now like to turn the conference over to Richard Downey, Vice President of Investor and Relations. Please go ahead.

Thank you, operator. Good morning everyone and welcome to Nutrien's conference call to discuss our fourth quarter results and outlook. On the phone with us today is Mr. Chuck Magro, President and CEO of Nutrien; Mr. Pedro Farah, our CFO and the heads of our three business units. As we conduct this conference call, various statements that we make about future expectations, plans and prospects contain forward-looking information. Certain material assumptions were applied in making these conclusions and forecasts; therefore, actual results could differ materially from those contained in our forward-looking information. Additional information about these factors and assumptions are contained in our current quarterly report to our shareholders as well as our most recent annual report, MD&A, and annual information form filed with Canadian and US Securities Commissions to which we direct you. I will now turn the call over to Mr. Chuck Magro.

Thanks, Richard. Good morning, everyone and thanks for joining the call today. The fourth quarter was the continuation of a 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 2018. 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 inputs demand spring across North America. This is due to the expected increase in seeded acreage, improved cash crop margins and farmers wanting to catch up on fertilizer applications after the past three seasons with a suboptimal window. The recent US, China trade agreement has also improved US farmer sentiment. For potash, we expect the rebound and 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 four months. However, short-term shipments to China remain uncertain as a draw down port inventory and the coronavirus has limited product movements. 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 prices. 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 million…

[Operator Instructions] Your first question comes from Jacob Bout with CIBC. Your line is open.

Good morning. 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, on the third quarter call, you said year-to-date, the same store sales were up 1.5%, so wondering what happened in the fourth quarter and then how does the same store sales that you saw compared to the overall industry and is there any nuances here within fertilizer seed and crop production?

Good morning, Jacob. So that number is a global retail number. I'll have Mike Frank to dissect it for you because we've seen good growth in the US and he can answer your question. 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 adjust for both FX and for fertilizer price, which last year, we had appreciation and so on a global basis on the 12 months, we did see a 1% decline. If you look at the US market specifically, our same store sales adjusted are up about 2%. So we actually had really strong performance in US. We were down in Canada, as you may know, in Western Canada, we really lost the fourth quarter window for both herbicide application and fertilizer. And so that ended up hurting our same store sales in Canada. And so that's kind of where we evolved from Q3 through to Q4.

And then compared to the overall industry?

Yeah, we don't have numbers Jacob for the industry. So the best numbers we have on an industry basis is in the US again, which 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 US crop protection. And last year, we saw an increase of about one and a half share points. Most of that being organic growth and so we're really pleased with how our business performed in the US as you note, it was a very tight window once farmers eventually had a chance to plant their crop, our supply chain and service approach to our retail network really kicked in and we saw significant share increased and so I would expect we lead the way in same store sales growth just based on that alone.

Thank you.

Your next question comes from Joel Jackson 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 could help me bridge for 2020. So are you assuming that you're getting some tailwinds here and maybe some lower cost per ton? Are you assuming lower royalties? I know there's different credits that have been changing the government have changed some of the ability to apply them. It also seems like you're maybe assuming a $15 to $30 a ton potash price increase globally from spot through the year. Can you maybe comment on the different buckets? Thanks.

Yeah. 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've 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 upper end of the guide. So then when you look specifically at our potash guidance, certainly, when you look at how we've sold our sales plan that's based on our view that we're going to see some decent growth moving up from 60 below 64.2 million tons, that's our guesstimate for 2019 up to 66 to 68 million tons and that's how we get our volume, so about a million tons of volume growth that we're assuming. And then when you look at our cash cost, we are assuming a slightly lower cash cost as we continue to optimize the potash network grow volumes from Rocanville, so that's built into the guidance. And then the rest is really the market pricing, which we sort of bookend for you on a macro level from sort of today's pricing through to slightly less than last year's. We don't want to get too much more specific than that because I think that's probably enough said, but we have some confidence in our guidance ranges. I think the biggest wild card that we have right now in potash is when will the China contract be signed? And even that I think we've taken a fairly conservative route where we believe that the contract will be settled now until the second quarter, as I mentioned in my prepared remarks because of the port inventory bill, but really because of the disruption from the coronavirus and not being able to get to the negotiating table or as well as move forward inventories inland 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 Isaacson 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 as it stands right now, how would you rank those in terms of importance to your bottom line? Thank you.

So, look, I think the overall guidance ranges that we've set assumes normal weather, it does assume the 14 million acres of incremental seeded acreage in the US that we've outlined. And so I think that you have to assume that the sales volumes that we've outlined in our guidance is key to the overall earnings. There's always a bunch of puts and takes in our industry. That's what agriculture is about. And I wouldn't want to overall rank them for you because I don't think that that would be appropriate and we wouldn't actually have a great understanding of which one is going to be most disruptive. I think given the situation in ag when we look at last year versus this year, last year there was clearly a geopolitical and the macro backdrop that pressured not only Nutrien's earnings, but with the entire sector. And the recovery that we saw is really nicely shaping up in 2018. There was a reset. And now we think that 2020 will be that year of recovery, but because of the situation of how lower prices went in the fourth quarter, and as well as the inventory that was build, some in nitrogen, but also in potash. We think that we're going to see the recovery in 2020. We just don't know when. The coronavirus just to give some commentary on that, obviously, we're watching it closely. Nobody really has 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 chemistry that are core to 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 going to impact us for the spring season. African swine fever, I think you mentioned that as well. We think that's the worst behind us there and that the herds are starting to rebuild. Certainly I think when you look at the results for 2019, you are going to see that grain 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 two years. But now that the settlement is agreed to, I know that there's some uncertainty on when we're going to start to see US agricultural products start to shipped to China at the higher levels, but we have confidence that that will happen in 2020. We have confidence that that's going to be a major tailwind for us, but we don't know exactly the time. So we're being a bit conservative because of all of these things, but most of the headwinds from last year should become tailwinds for this year.

Your next question comes from Don Carson with Susquehanna Financial. Your line is open.

Excellent, Chuck, in Canada, you get a difficult business environment these days with blockades and carbon taxes, things like that. Can you talk about what the impact of the current rail situation is on your ability to move product to both export and domestic points? And then what is the potential outlook for carbon taxes on your Alberta nitrogen production?

Good morning, Don. So look, on the CN rail disruption here in Canada right now, we do have some cars, some ammonia cars and some potash cars that are caught up in the slowdown. So the situation is manageable for us right now. It's far from ideal, but we don't send a lot of cars east from our operations. So most of our production as you know is in the west, we don't use the east as a core exporting route. So the majority of our exports are going to 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 slowdown in Canada. And so overall, we're watching the situation, we don't think it's going to 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 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 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 cogent facility at one of our operations that allows us to have carbon tax credits. 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 we have found smart ways to offset our carbon taxes by making some, I think strategic investments over time and we'll watch the situation over time to see how things progress, but certainly right now, we're quite comfortable that the Canadian assets are going to remain very competitive globally and in fact, with ATCO gas providers it is 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 like to understand how much excess free cash flow there might be this year. So we took the midpoint guidance, you apply some historical cash conversion, we get about $2 billion of cash flow, free cash flow, about a billion of dividends. So out of the billion that's remaining, how much of that it's already kind of tagged for growth spending like acquisitions or growth CapEx? And then how much of that might be excess available for share buybacks, stuff like that? Thanks.

Good morning, Andrew. I'll have Pedro, our CFO answer your question and I'll have some final comments as well.

Andrew, good morning. Our cash flow this year was particularly positive and a good surprise, but it's not a total surprise for those who're working here. We ended up last year very high in inventory. If you recall, we bought in 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 way in excess of course of earnings. And we think that net cash flow and working capital to continue to improve. Of course, there's going to be a lot of puts and takes, but we think that we – the efforts we were putting this year will continue to bear fruits in this coming year. In terms of our capital allocation, how much we're going to be using for different uses. I mean, our capital allocation strategy continues to be the same. So after we protect the balance sheet and we spend an hour sustaining capital to conserve our assets. We're going to be taking a look at everything and I compete for capital basis. We have a share buyback program active in January and February and of course, we were looking at our different alternatives for inorganic growth and 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, the company was built to generate significant cash flow, even in market conditions like we saw last year, I think we've demonstrated that now. And the priorities haven't changed, right. We want to maintain our investment grade rating, we have a very strong balance sheet, we want to protect our assets. So from a sustaining capital perspective, we allocate about $1 billion to put back into the assets to make sure that they're safe and reliable. And then beyond that, then 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, to return capital through buybacks 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 Brunner 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 midsized to large acquisitions there or should we be limiting our thought process to pretty much tuck-ins only at this point?

Good morning, Lucas. I'll have Mike Frank answer the question for you.

Lucas, I think as we think about our opportunities in North America, they're primarily tuck-ins. Obviously, if a significant retail asset came onto the market, we would look at it of course, but we're always focused on quality and value generation for our shareholders. And so right now we have a, I think a pretty solid lineup of tuck-in opportunities. Last year, we acquired over 73 retail branches through 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 Agrichem 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, but 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 to really just describe whether or not you're seeing any definitive market share benefits 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 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 million of online orders. In terms of changes to the platform, we continue to add more products onto the platform. Last year it 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 we're turning on in 2020. We recently turned on a crop planning tool, which allows our sales agronomists to sit down with our customers and plan their farm field by field across all inputs, it creates insights both for our supply chain, but it also allows our sales agronomists to really work with our customers to provide those full acre solutions, including financing opportunities that we're now financing using Nutrien Financial, which is also integrated into the digital tools. 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 features that we've added onto the platform at the last half of 2019 and here early in 2020. So our anticipation of doubling our online orders is I think very achievable and we've got a lot of momentum right now 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 sold only with a price cap and that the buyers were given 60 days to lock in the price, which 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 Capitex involved in the selling practice and if so, do you expect it to continue after the products market tightens up?

Yeah. Good morning, Steve. I'll have Ken Seitz our head of the potash business answer your question.

Thanks, Steve. Yes, 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 it's not the case, it's certainly not the case for Capitex. Capitex as they're very well established channels into that country and you can see the price is at $245, $250 a ton with various rebates depending on volume. But it's not the case that Capitex is looking at on traditional pricing mechanisms with their customers 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 potash market outlook for 2020. So at the market level looks like you're forecasting about a 2.5 million ton kind of increase in global shipments at midpoint. Your own sales forecast calls for about a million ton increase in sales and I'm thinking about how as new entrants in the market, we would think that there should probably be about 750 to 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 kind of there's enough room for everybody else to see you a reasonable recovery and normalization of production? Or do you think that there's more capacity that's the permanently come off stream to the developed market?

Yeah. Good morning, Adam. So I'll just give you a high level perspective on your question here. Certainly, 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 a view that as the market continued to grow at its historical rate it would require more supply and the new entrant supply would fit pretty nicely into the increased demand. Obviously in 2019, we had the reset and I think Nutrien looked at our sales book and we pulled back 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 plan is outlined in my prepared remarks is, we are going to take our sales volumes up and we think that it will be supported by growth in Southeast Asia and in North America. China is probably going to take a little less than they took last year, but overall when we look at the sales plan that we put forth, we think that the market is going to need the tons. And we're not sure exactly what others are planning or could do, but certainly with the increased market that we see coming in 2020 that depending on when we see a channel settlement, our view strongly is that that our sales plan makes a lot of sense for us and for our stakeholders. And then we'll just have to see how the rest of the market moves their tons into it. We don't really have a lot of insight on their sales plan.

Your next question comes from John Roberts with UBS. Your line is open.

Thank you. At your Investor Day last year, you identified some nitrogen brownfield opportunities both near term and a little bit longer term. Could you give us an update in where your thoughts are on that?

Yeah, good morning, I'll have Raef Sully just walk you through the progress.

Yes, thanks for the question, John. At the Investor Day we identified about $300 million of spend on about five or six projects. The first wave of those is actually coming online this year. So if you look at our forecast volumes, we're expecting to see at a million tons more product sale in 2020 versus 2019. Some of that is ammonium sulfate, the 400,000 tons there. Now, the 700,000 tons is a mix of ammonia and urea, some of that of courses is from less unplanned – less planned outages. Some of it is the first wave of these expansion projects. We have some other projects coming online in '20, should we finished out Borger expansions and also the Augusta urea plant and so we'll see continued growth in volumes through '20 and then into 2021.

Your next question comes from PJ Juvekar with Citi. Your line is open.

Hi, Chuck, you mentioned that lower raw material cost in phosphates would be a headwind to a significant market recovery. Are you saying that phosphate prices are unlikely to go up due to the raw materials? And what's your margin outlook? Thank you.

Good morning PJ. I'll have Raef Sully answer the questions for you.

So PJ, 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 the importers get back into the market in a big way. We don't think they'll be a large price appreciation; I think they'll be some. But the outstanding of ag figures when you look at our phosphate business, you'll know that most of the margin these days comes from non-agricultural products that we sell, including our purified industrial products.

Yeah and PJ, one last point is just, we did lower our total cost because we converted Redwater to an ammonium sulfate plant. We did some modest expansions of our two phosphate facilities in the US and of course, we're not buying imported rock anymore for Redwater. So overall that's what's driven our costs and even in these tough conditions we saw in '19, we did have positive margins as Raef said and most of our product make is not related to agriculture, it's related to industrial business and food applications, which I think has more stable margins over the long-term. So those two combinations when we look at our business, it helps a lot and it insulates us a little bit more than from the kind of the agricultural backdrop that we saw in 2018 and '19.

Your next question comes from Mark Connolly with Stephens Inc. Your line is open.

Thank you. Two questions, 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 going to affect your mix and timing in nitrogen?

Good morning, Mark. I'll have Raef Sully answer the first question. And then Mike can give you a view of moisture levels in the US. And then Raef can come back and talk about the impact.

So looking into – there's certainly being – I mentioned the expansion projects previously, there's been a mix of those plus efficiency work going on with the large turnarounds we've been doing. So we certainly have been focusing on efficiency. I think the majority of the costs come from lower gas costs year-over-year. We've seen that in the US. So I was – but then I think let's Raef answer my part of 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 of I80, I would say soil moisture is good, but not excessive. And as we talked to our customers throughout that region, they're anticipating getting into field once it warms up and for the most part it's been a pretty mild winter through a lot of that region. If you go north of I80 into the Dakotas and Minnesota, Wisconsin, obviously, they had a really early winter hit them. So moistures especially in South Dakota are still high, but the ground is frozen. And so even though they've had solid snow conditions the moisture hasn't been added to, I think, over the winter. So look, we're anticipating, as we've talked about another 40 more million acres getting planted in 2020. And a lot of that, over 12 million acres of that is corn and beans that are going to go in, in the Midwest. And so that's our anticipation. And as we talk to our customers right now and we look at our order book, our order book for corn seed is incredibly strong, where we're seeing a lot of momentum in corn. And I would say the bean, soybean order book it's consistent with our expectation of about 85 million acres of soybeans right now. So that's what farmers are planning on and anticipating and obviously, we need a normal spring conditions in order for us to get those acres planted.

And Mark, just to wrap up with your last one, 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 Benson Andrews with Morgan Stanley. Your line is open.

Hi, this is Jeremy Rosenberg on for Benson. Thanks for taking my question. Just wanted to ask, on the potash outlook, looks like versus prior guidance you took the India number down maybe about 450,000 tons of the midpoint, Latin America down about 800,000 tons and other Asia looks basically unchanged. So just two quick ones, one is just what drove the changes to the India and Latin America shipment numbers? And two, just given the climate and palm oil prices over the last call, a month or so if you just see any risk to the other Asia demand number? Thank you.

Good morning. I'll have Jason Newton, our chief economist answer your questions.

Good morning, Jeremy. On India, the major driver, I mean, we still expect year-over-year that we'll see shipments going into India, possibly thousand tons. We ended up last year [technical difficulty] 1 million tons, but we think there is some risk of those change in India as a result of lower prices and we'll watch that going forward. We do expect the needle move up. In Southeast Asia we expect demand will be up about 1.5 million tons and yeah, palm m oil prices have been really volatile and that's related to the coronavirus [technical difficulty]. But as we look at what the USD and I was just saying in terms of the supply demand outlook it is tightening significantly. And so we think price [technical difficulty] as a result of that. And there's 4% from the level last year. And so we expect the 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.

Good morning everyone. 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 a crop nutrient standpoint as well as from seed in crop protection in light of maybe some additional rebating discounting going on in the seed markets and in the case of fertilizer some of these prices, particularly UAM and phosphate may be below where pricing was turning levels. Thanks.

Good morning, Mike Frank can answer the question.

Yeah. Michael look, if we kind of go through the major categories from a margin standpoint as we head into 2020. Firstly, from a nutrient standpoint, with the performance of our nutrient business last year where our margin per ton dropped $6 a ton across our global retail business in Q4 and early days here in 2020, we're seeing those margins hold and so we anticipate similar margins on a per ton basis in 2020 that we delivered in 2019. On CPs we had a very challenging first half of the year in CP, there was a lot of inventory that was carried into early 2019 across the retail network. And then they 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 margins in crop protection. 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 head into 2020, I would actually anticipate some positive opportunities on crop protection margins. We don't anticipate 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 levels of competition and opportunities for us from a margin standpoint. We also saw just on the crop protection before I leave 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 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 two margins. Finally, on the seed side we are seeing to date margins on corn seed at pretty historic levels and so and with more corn acres to be planted, that's going to be good for our seed margins. Soybean seed 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 I would say that's probably the one area that we're watching out for. But overall, I think if you look at seed on an all-in basis, will likely be in similar margins as we've been historically especially with more corn acres 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 your Brazil acquisition strategy and how the integration of the previous acquisition is going. Are we seeing any synergies out of that so far?

Good morning, Jonas. Yeah, 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 tuck-in 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 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 Agrichem products, which are industry leading nutritional products that come with really nice margins 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 backbone and the capability of our retail network. And that will likely take the next two or three years and from that point as we get that 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 Europe potash data, you show that Capitex shipped about 17% of its volume to China in the quarter. Are those shipments priced at the old 290 per ton delivered that the old China contract was under or is there a different set of prices that are used now? And secondly, Chuck I think you said that acquisitions would benefit retail EBITDA by 125 million in 2020. How much did they benefit retail EBITDA in 2019?

Yeah. Good morning, Jeff. So I'll have Ken Seitz to answer the potash question and ten we can come back and answer the M&A question for retail.

Great, so yeah, with respect to fourth quarter shipments into China, we position 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 wouldn't see go to China, we've been provisionally shipped there and headed into bonded warehouses. As you probably know China stopped additional shipments into that country, sea imports at the end of August yet Capitex shipped in preposition material and in anticipation of strong demand in China in 2020 and so the pricing mechanism for those provisionally shipped volumes will be that they're awaiting a new contract, which is relevant because in fact, Capitex is not the only supplier. So that when we look at port inventories in China and say, 3.5 million tons, well, about a million 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 Jeff, just answer your second question. So the impact from M&A on 2019 was somewhere between 35 million and 40 million. As you know, we didn't close Ruralco until October. So that was really the driving difference I think between 2019 and 2020, as well as we have several of the other tuck-ins that will start to show benefit in 2020, so to answer your question, somewhere between 35 million and 40 million.

And there are no further questions put up at this time. I'll turn the call back over to Richard Downey, VP of Investor Relations.

Thank you, operator. Thank you everyone for joining us today and if you have any additional questions, Investor Relations is available take your calls. Thank you.

This concludes today's conference call. You may now disconnect.