Good day and welcome to the Corteva Third Quarter 2023 Earnings Call. Today's conference is being recorded. At this time, I'd now like to turn the conference over to Kim Booth. Please go ahead, ma'am.

Good morning and welcome to Corteva's third quarter 2023 earnings conference call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer; and Dave Anderson, Executive Vice President and Chief Financial Officer. Additionally, Tim Glenn, Executive Vice President, Seed Business Unit; and Robert King, Executive Vice President, Crop Protection Business Unit, will join the Q&A session. We have prepared presentation slides to supplement our remarks during this call, which are posted on the Investor Relations section of the Corteva website and through the link to our webcast. During this call, we will make forward-looking statements which are our expectations about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including but not limited to, those discussed on this call and in the Risk Factors section of our reports filed with the SEC. We do not undertake any duty to update any forward-looking statements. Please note in today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings press release and related schedules, along with our supplemental financial summary slide deck available on our Investor Relations website. It's now my pleasure to turn the call over to Chuck.

Thanks Kim. Good morning everyone and thanks for joining us today. Just over a year ago, we unveiled a strategic framework to enhance Corteva's competitive position while achieving margin expansion and long-term value creation. What we didn't know at the time was how important the efficient execution of that plan would be in delivering continued earnings and margin growth in 2023, a year with no shortage of complicating geopolitical, macroeconomic and ag-specific factors. We're making good progress towards our 2025 earnings and margin targets despite these challenges. Through the first nine months of the year, we generated over 120 basis points of margin expansion. What sets us apart is the strength and balance of our Global Seed and Crop Protection portfolio and our continued focus on controlling our controllables. Our Seed business is delivering exceptional performance in 2023 and is set up for continued growth with our pipeline of technology in new hybrids. For 2024, we will roll out over 200 new hybrids and varieties around the world after more than 300 in 2022 and 2023 combined. This is helping farmers around the world increase yield and production which is reflected in our price for value strategy. Thanks to the continued success of our Enlist platform, where last quarter, we announced having become the number one selling soybean technology in the US, we're expecting to deliver royalty reduction benefits in 2023 of approximately $200 million with another $100 million expected in 2024. This is about a year ahead of our plan to achieve royalty neutrality. And just last week, we announced our next series of Enlist E3 soybeans in North America that builds off our industry-leading A Series performance. More to come on this soon. In Corn, we are delighted to say that we now have a decade view of…

Thanks Chuck and welcome everyone, to the call. Let's start on Slide number 6, which provides the financial results for the quarter and the year-to-date. You can see from the numbers that we continue to deliver operating EBITDA growth and margin expansion despite the mixed market conditions that Chuck outlined. Briefly touching on the quarter. Sales and earnings were largely in line with our expectations. Organic sales were down 13% compared to prior year, with seed pricing gains offset by volume declines in both Seed and Crop Protection. Lower seed volumes were driven by lower expected planted area and delayed farmer purchases in Brazil and an earlier operational finish to the season in North America. Crop Protection volumes were impacted by approximately 95 million in product exits. In addition, we saw inventory destocking in both North America and Latin America and delayed farmer purchases, particularly in Brazil. Turning to year-to-date, sales were down 1% versus prior year, with broad-based pricing gains offset by lower volume. Global pricing was up 9%, with gains in all regions and increases in both Seed and Crop Protection. Feed volume was down 5% versus prior year, largely driven by the decision to exit Russia. Crop Protection volume was down 16%, which includes a 5% impact from product exits. Put in perspective, total exits year-to-date represent a $530 million impact to volume. Now, despite the reduction in the topline growth, strong operational performance translated into operating EBITDA of nearly $3 billion year-to-date, an increase of 5% over 2022. Pricing, favorable product mix, and productivity more than offset higher costs in volume and currency headwinds, driving more than 120 basis points of margin expansion for year-to-date. So, let's now go to Slide 7. You can see the gains in the Seed business were offset by Crop Protection…

Thank you, Dave. Now, let's move on to your questions. I would like to remind you that our cautions on forward-looking statements and non-GAAP measures apply to both our prepared remarks and the following Q&A. Operator, please provide the Q&A instructions.

Thank you. [Operator Instructions] We'll first take our first question from Vincent Andrews from Morgan Stanley.

Thank you and good morning everyone. Dave, can I just ask you, you made the comment in the slide that you're expecting low single-digit pricing for the company in 2024. It seems like it's driven mostly by Seed, but I'm just trying to get the bridge there because we see pricing in crop chem was down, I think, 4% in the third quarter. You're citing competitive pressures in two of your four major regions, what's the algorithm for next year in terms of getting the total company to flat? Is crop chem going to be positive? Or is it going to be down slightly? And then is the Seed order book giving you confidence in the US that you're going to achieve kind of mid-single-digit-ish price on the Seed side of the equation to get us to low singles for the total company?

Let me just share with you a couple of highlights. And then, Tim, maybe you could comment a little bit on Vincent's point about Seed. Vincent, you're right. So, low single-digit for the company overall is the expectation right now. And again, this is an early indication and I call it, preliminary view as part of our framework for 2024. For Seed, Tim will comment more specifically, but obviously, we're looking at continued positive, we call it price for value, as you know. So, we think that's going to lead the way in terms of our year-over-year pricing performance. For Robert's business, the Crop Protection business, we think the price is going to be generally favorable with the exception significantly for our LatAm business, where we continue to see pricing pressures. In the aggregate, we think Crop Protection pricing will be potentially up slightly to neutral to down slightly compared to 2024. So taking all that together gets us to the low single-digits for the company. Again, early, Tim, you want to comment on Seed

Yes, absolutely. And I'll just reemphasize what Dave said on pricing. This year, we had exceptional pricing, roughly 14% year-to-date and very broad by crop and geography, a testament to our technology and how we've executed across the board as an organization. Next year, we do expect that to return to more of a typical call it, low single-digit type of a growth on a global standpoint. And looking at where we're at in North America, maybe the setup there to touch on that, including how things are going from a pricing standpoint and what the order position looks like. We do expect a rotation from corn to soybeans, call it, 3% to 4% of the area shifting back. We're well advanced in terms of harvest in North America from a farmer standpoint. And I'd say farmers are very satisfied with our product. And that puts our current order book in a good spot for this time of year, allowing for the shift from corn to beans. That said, the next 45 days are really critical for us as we lock up our business for 2024 and secure payment. But the order position is good, our price position in the marketplace. We've been out there since August in front of customers and putting proposals in place and it's holding strong. So we feel very good about what our opportunity there. And we continue to have excellent momentum in the marketplace in North America. So strong value proposition, strong execution by the team. And so we feel good about how we're setting up for 2024 in North America despite the shift from corn to beans.

Thank you. And we'll take our next question from David Begleiter from Deutsche Bank.

Thank you. Good morning. Chuck, have any of the changes you've seen in Crop Protection impacted your confidence in achieving the midpoint of the 2025 EBITDA guidance of $4.4 billion?

Yes, good morning David. So, obviously, it's a pretty dynamic market that we're operating in right now. Let me just give you sort of what we're thinking. And it's a very good question. And obviously, we'll have a lot more to say as we give final results for the full year of 2023 in February, and then we'll really be able to talk about 2024 and with a level of degree of specifics that we just can't get into today. But I'd say right now, the entire Corteva organization, it's remaining very highly focused on hitting that $4.1 billion to $4.7 billion with the 21% to 23% EBITDA margins. I'm not going to talk about the specifics in terms of exact numbers because I think the key, I think, for us is that we're still feeling very good that we're within that range. And if you think about that just for a minute, a couple of years ago, just look at what's happened, right, over the last two years, we've had the Russia invasion of Ukraine. We've had a global chemical destocking, and now we're seeing weakness in Brazil, which we haven't seen weakness in Brazil since 2015. But when you put all that together, it's pretty clear that we've also overachieved when it comes to some of the controllables. So if you recall that the framework that we laid out last year, it had 4 buckets, portfolio simplification, royalty neutrality, product mix and what we called operational excellence. And these were largely in our control, and we've made very good progress. In fact, on a lot of these dimensions and elements, Dave in his prepared remarks commented, we're running a year and sometimes a little ahead of program there. So, we're finding ways as a management team and as…

Thank you. And we'll next go to Joel Jackson from BMO Capital Markets.

Hi, good morning. Thanks for taking my question. I'm looking at your crop chem's manufacturing rationalization plan, can you maybe highlight some of the major changes? You did highlight a high level on the slide last night. Maybe talk about some of the low-hanging fruit, which molecules are you moving externally? Which one did you want to make sure you're keeping internally. Maybe just some really good, maybe a few anecdotes or low-hanging fruit you could talk about that's really driving this plan? Thank you.

Yes, good morning Joel. let me start with sort of the genesis of the program and the framework and the objectives, and then I'll turn it over to Robert to give you a bit more specifics. So, as you well know, I hired Robert about year and a half ago to run the Global Chemical business. And the program started almost immediately thereafter. So, we've been on this journey for well over a year when it comes to looking at CP ops. And really what we did, and Robert led the charge here for the organization is, we went out and we looked at sort of chemical operation best practices from literally around the world. . So it's been a very comprehensive review. It's been underway for a very long time. And it's a multi-program kind of programs that we're thinking about that will take us through, I'd say, the next couple of years and the benefits that you're going to see, we laid out some of the benefits for 2025 on a run rate basis of about $100 million. That was some of the work that we accelerated. But the real benefit for the program won't really bite until kind of post 2025. We're thinking that there's going to be very significant benefits between 2025 and 2030. And really, the objectives are -- if you think about our vision is, we want to bring our CP ops into kind of the modern operating world of chemicals. Safety is one of our core values. It's very important to our company, and that would be at the first and the top of the list when it comes to the objectives that we're trying to implement here. We also want to improve our supply reliability. We think we handled COVID pretty well.…

Yes, the announcement yesterday is one that will be a big step forward for us. It's -- when you look at the pieces that Chuck laid out there, really focused on what can we control. And this one is a big part of the strategy that we laid out at Investor Day, where we're -- our journey is to become excellent in operations, and we don't take that lightly. It really underscores the approach of shifting more to an external supply balance with asset-light capital. That's going to improve our cost competitiveness and our network flexibility to be able to respond and change with the ever-changing markets that we're in. . The thing about this is that this is something that we started on about a year ago, I think, as Chuck said. But we've been able to do some acceleration. The environment has allowed us to do some acceleration, but we've been working on this for some time. So, the execution of these actions is going to allow us to not only drive profitability. But we're going to be much more competitive in the market from a cost standpoint, and it puts us much further down the road.

Thank you. And we'll next go to Kevin McCarthy with Vertical Research Partners.

Yes, good morning everyone. A question on cash flow and deployment. If I consider your updated guidance on free cash flow as well as the remainder on your share repurchase commitment for 2023. It seems like you could end the year with more or less zero net leverage. So two questions would be, is that fair or not? And more broadly, Chuck, what are you thinking about deployment for 2024 and beyond?

Why don't, Dave, you talk about the numbers and then I'll answer the deployment question.

Yes. Kevin, so yes, thank you, Chuck. So Kevin, exactly. I think you're right. Just to refresh, we've updated the free cash flow guide as of today to that $600 million to $1 billion for the full year. Really, the difference as we pointed out in the prepared remarks really has to do with some higher inventory levels as a result of reduced volume outlook as well as lower payables, which goes with what Robert also stated just in terms of managing our current production capacity in light of the market demand or overall volume. So, your estimate about essentially being zero net debt, I think that's a reasonable forecast at this stage when you think about where we are in translating that cash flow. And it does include, as we mentioned, the $750 million of share buyback for this year. Chuck, do you want to comment a little bit about 2024?

Yes, sure. So, Kevin, the way we're thinking about it, the $800 million at the midpoint that Dave provided and then the strength of this balance sheet, we have a lot of financial flexibility as an organization. We also have an A- credit rating. So, when you put all that together, and we've made very good progress, I think, on managing our working capital. It's been challenging because of the destocking that went through the global industry. But we don't think that next year will require, Dave, a significant investment in working capital. In fact, it could be a source of cash.

Yes, definitely.

When you put all that together, we think that there will be incremental free cash flow in 2024. So, your question is a good question, how are we thinking about it? And the way we're thinking about it is we think that the formula that we've got right now works. We prioritize organic growth in the organization. And as you know, we're increasing investment in R&D. We're absolutely committed to that. We think it's the right thing to do longer term. But we also are now returning a significant capital to shareholders, which we have been a very good track record of doing that. And this year, 750 is a testament to that. And I would expect these decisions are obviously Board decisions, but I would expect that that formula that has served us well, I think, is something that we will certainly have a very good look at going into 2024. The other area, though, will be in organic growth. So, last year, we made two acquisitions in Biologicals, and I'd say we're very pleased about the performance. Even in this market backdrop, the Biologicals businesses are performing very well, and Dave gave some of those numbers today. And even next year, these businesses are expected to grow double-digits. So, we would be looking for other acquisitions or mergers or commercial relationships in the biological space for sure. And then, of course, any other opportunities that we think would drive long-term shareholder value. And so I think what you're going to expect to see is really a balanced approach to the allocation of capital. Organic growth, some inorganic growth perhaps and return of capital.

Thank you. And we'll next go to Frank Mitsch with Fermium Research. Please go ahead.

Good morning. Just curious now that chlorpyrifos is back in the news and the courts have rejected the EPA's decision of a couple of years ago and is now allowing it. I know that you guys had -- I believe you stopped producing it a couple of years ago. I'm just curious if you have any updated thoughts regarding chlorpyrifos and the recent rulings and what your future strategy might be there.

Really no change in our thinking, Frank, at this point in time. This is a business we made decision to exit. Strategically, it fits as well -- that decision fits as well with our overall portfolio criteria today. So, appreciate the question, but no real change, no update in terms of our thinking.

Thank you. And next, we'll go to Steve Byrne with Bank of America.

Yes, thank you. Don't your crop chemicals have registrations that specify where they're manufactured, and thus, is that -- is that a challenge for you to shutter facilities because then you'd have to have the respective registrations in countries and crops revised? Or is that less of an issue for the plants you're targeting. You mentioned Pittsburgh, California. Are we right on that. That's where you make your nitrogen stabilizer, which wouldn't have any relevance to registrations? Is that right? And maybe one broader crop chem question, and that is any lessons learned on the destocking that you've seen this year that you had a competitor yesterday that doesn't seem to have that same issue. Is there some fundamental reason why this is more challenging for some than others?

Good morning Steve, maybe Robert, you can answer the registration questions, and I can come back with the lessons learned.

Sure. Yes, Frank [ph], you're right. Anything that we produce does have registrations. It does tie to where it's made. And then, of course, where it's applied. Optinyte is one of the main products that is made out of Pittsburgh that is our nitrogen stabilizer. It goes into what brand name N-Serve and Instinct NXTGEN. And both of those are leading industry-leading nitrogen stabilizers that is a good business for us. And so we have plans to move that production to another location. We will continue to serve our customers seamlessly through this time, and we'll be in a better position in the future for this product to continue to serve the market. So, the registrations and things are part of the planning process when any time we move products are we -- many times, we always have redundancy built into our system. And so we have other plants registered many times. This is one that we'll be move into registration and that's all in the plans and timing of the overall transition here. So yes, good question, absolutely something we have to do, and it's always in the planning when we go to rearrange our network.

And Steve, on the global CP destocking, look, I think every player in the industry has been involved in this in some dimension or degree. So are there lessons learned? Obviously, there is. And when we look back on it -- were there signs of sort of a buildup in the channel? Yes. There was. We watch this data very carefully. We have a lot of insights in terms of what's going to ground and what's going into the channel. And when you look back over the last couple of years, it was pretty clear that the demand on the farm was nice and consistent. And that was a good observation. It still remains that way today. but there was more product going in the channel than going out of the channel and so that was clear. But like we've internally discussed these were orders that were coming from long-established partners in the channel. These are major players that manage their inventory quite well, and these were real orders. And so when we started to think about this, I'm not sure we missed that. I think that there was a view that perhaps the on-farm demand would continue to increase. And that didn't happen, obviously, but the demand has been quite steady. I'd say if there was one area where when we look back now and we see what's happening in Brazil, because look, the US destocking, I'd say, is more or less, and there are pockets, but more or less behind us, which is the good news. But in Brazil, what we're seeing is that there's still elevated channel inventories. And that dynamic is different. The influence there that we're finding is that there is a significant amount of generic supply coming into the country, which is impacting the overall products that are available in Brazil, and that is slowing down the destocking And some of this data is visible and some of this data is less visible, and it was very difficult to put it all together. But it is pretty clear to us now that we've got sort of a unique situation in Brazil. That where we're seeing sort of generic pressure coming into the marketplace. And that is an area where we -- whether we are the only company that missed it, I don't know about that. But it is something that was -- that once we started to look for it, you could clearly see that there's elevated inventories now coming in from offshore from -- mostly from China.

Thank you. And next, we'll go to Jeff Zekauskas from JPMorgan. Please go ahead.

Thanks very much. There are two questions. In terms of your operating cash flow, you're $460 million behind where you were last year when you generated roughly $900 million in operating cash flow. So, to get to the bottom of your operating cash flow range of $1.2 billion, you've got to do $3.8 billion in the fourth quarter versus roughly $3 billion last year, and your inventories are higher and receivables are higher and payables are lower. Can you really get to that to the bottom of the range? And then secondly, on a normal basis, what should your operating cash flow be in general or relative to your EBITDA? It gyrates so much positively and negatively.

Yes, Jeff, those are -- this is Dave. Those are good questions. So, you're right, there's a lot of free cash flow or cash from operations to be generated in the fourth quarter. When you look at it, though, on a year-over-year basis, if you will, the change on the change, it's significantly related to receivables slowdown reduction, which is very understandable in the light of the revenue outlook. And by the way, while DSOs have ticked up a bit, they're still within a very healthy parameters compared to historic averages. And then the other thing is inventory because we are bringing inventories down as a result of the volume declines. And as I mentioned earlier, and Robert referenced also the reduction in procurement or purchasing as a result of those lower volumes. So, both receivables and inventory will be sources of cash on a year-over-year basis, an important deliverable in the fourth quarter. Payables on the other hand will represent a headwind. Deferred revenue is not much of a change compared to prior year. So that's really not significant. It doesn't play really into it. It's really a working capital story. In terms of run rate, kind of where we want to be, where we need to be, I'm going to use free cash flow as opposed to cash from operations. So, after CapEx, free cash flow, we think, again, in the range of building to 40% then to 50% and so forth is very, very reasonable for the company. In 2024, when we look forward, we'll again have positive from working capital, we believe. We'll have a little bit of increase as a result of what we just mentioned. On the restructuring, for the Crop Protection business in terms of cash outflow on a year-over-year, there are some other puts and takes. But next year should be a good year for cash flow for the company. Thanks for the question.

Thank you. We'll next go to Adam Samuelson from Goldman Sachs.

Yes, thank you. Good morning everyone. I wanted to maybe come back to the Brazil destocking and Crop Protection volume outlook a little bit more closely. And maybe just can you be a little more clear on what the volume expectations would be for Brazil and Latin America broadly in the fourth quarter on volumes? And how at this juncture, are you thinking about the shape of that volume through 2024 given what potentially could be more carryover inventory if channel inventories are still high and planted area, especially for corn isn't actually growing?

So, Dave, do you want to cover that and I can provide some comment--

Yes, yes., So we will see some growth in the fourth quarter in Brazil. And part of the reason is it compares to -- and this is on the crop protection side. It compares to an order pattern and a sales pattern last year, which, as you recall, was much more significantly accelerated. We saw basically a very significant increase in orders last year for Brazil. compared to this year in terms of the quarterly pattern. When we look for 2024, our preliminary thinking, and I think I had mentioned this earlier in the prepared remarks, we're looking at basically kind of flattish or muted volume growth on a year-over-year basis. We expect some of the macro conditions to continue that are characterized in the second half of this year.

Yes. Adam, the way I think about this is if you think about Q4, CP Brazil, the midpoint of the guide or the guidance range we're going to see continued weakness both in volumes and CP in our business and price because of the influence that that Dave just described. And the channel still has to go through some destocking. So, the way to think about Q4 is continued weakness in terms of volumes and some stress on price because of the destocking that we expect will continue at least into the first couple of quarters of 2024 because the channel is destocking, the rate of destocking, though, is just lower than we had expected. And so when I look at this, I'd say we're going to get to a destock Brazil. I can't tell you exactly when. But from a planning perspective, going to assume that at least for the first two quarters of 2024 that we're going to see some weakness when it comes to overall volumes because of the destocking.

And let me correct because I was looking at another data point when I referenced the Latin America Crop Protection, we're actually going to see volume declines in the fourth quarter in Crop Protection. So correct that.

Thank you. And next we'll go to Aleksey Yefremov from KeyBanc Capital Markets.

Thanks and good morning everyone. I just wanted to follow up on competitive dynamics in Brazil. Specifically the shift to more generic supply? And how do you think this is going to evolve in terms of long-term competitive status of that market and also pricing next year?

Yes. So, I guess at the highest level, we still think Brazil is a fantastic market. It's one of the only markets in the world that will continue to grow production. And certainly, Corteva is absolutely committed to the market. In fact, if you think about Brazil over the last -- in 2015, the last time we sort of had a pause in that market, soybean hectares are up something like 30%. Corn hectors up something like 40%. So, it's just been a great growth market. And a lot of companies have enjoyed that. But Brazil has never been a straight line up nor will I believe that it will ever be an easy market to do business in. And there's going to be periods I think where we're going to see a pause or even a step back. But we're still highly committed to this market. Now, when I talk about generics, I guess, let me define it for you. These are organizations that produce molecules that are -- it's not the off-patent companies. These organizations have no local representation in country and no service, which is very important. They ship the bulk molecule into the country and then they assume that it will be picked up distributors or a lot of times it goes direct to large farmers. That's how we define generics. And generics have always been a part of the global CP market. I don't think there's anything new here except potentially one thing. So generics have always been part of the global market. It's always been a slightly larger part of the Brazilian CP market. Where I think we've been observing in the last, I'd say, three months or so is that there's a new level of aggressiveness when it comes to pricing. And in fact, we would say that a lot of these molecules, the prices that they're selling for would not cover their full costs. So, where does this go to your question? We think that this is not sustainable, and there's a lot of reasons why that is. But there is a performance trade-off for these AIs that I think it's important. Many of these AIs are older chemistry and so they'll have resistance issues. And a lot of the farmers, I'd say many or most of the farmers, really want the service. And in Brazil, especially technology does matter. Given the insect and disease pressure that, that country has, you can get away with generics for a short period of time, perhaps and make the cost performance trade-off. But longer term, I think that there's going to be a growing place for differentiated technology, especially when it's backed by high service. And so we don't think that this is a structural change in the country, but it is a reality today that we have to deal with.

Thank you. And we'll next go to Ben Theurer from Barclays.

Yes, good morning and thanks for taking my question. Just wanted to -- if you can maybe elaborate a little bit also on what you're seeing in the other markets. We spent a lot of time in North America and South America right now. But looking into some of the dynamics in EMEA and Asia-Pacific, like early stage, how do you think about these two regions looking into 2024? In a similar way, you've provided us a framework for North America and Brazil and some of the commentary. Anything you can share on EMEA and APAC? Thank you.

Yes. So, let me give you the backdrop and then I'll turn it over to Tim, maybe you can cover Seed and Robert, you can cover CP. The backdrop, as we said in the prepared remarks, the fundamentals are still they're still robust. They're mixed, given the Brazil weakness we're seeing. But there has been record demand for biofuels. And in fact, feed demand is quite high in North America. So global stocks to use are ticking up a little bit. But overall, what we're expecting is that there'll still be healthy farmer dynamics, and that's exactly what we're seeing. Farmers are still prioritizing their investments in yield and production. They're managing this very, very well. And we don't see a very significant shift in sort of buying behavior, except for the kind of the thing we've talked about many times, they move just in time. So, the overall Ag market fundamentals are healthy. And maybe, Tim, you can talk about -- go around the regions in seed and then we'll do the same thing in CP.

Yes, Chuck. So EMEA, as you can see from our results this year, a lot of volume pressure in EMEA, really strong pricing. So excellent results considering how the volume was down, but take rush off the table as that was a big chunk of our volume decrease in Europe. We saw a general reduction in the planted area this year for corn as a lot of, what I'd say, stranded corn in Ukraine was migrating into Europe and put a lot of pressure on the local commodity price, farmers planted less corn. As we go into next year, we see that situation, I would describe it as stabilizing. So, not necessarily a recovery, but stabilization is the way I think about it from a European seed standpoint, which is a positive step. That was -- that's a very positive step. We talked about North America, so I won't touch on that. Latin America, obviously, this year, heavily influenced by the, I'll call it, [indiscernible] corn in Brazil, reducing the summer and safrinha area. And I'd say sort of a recovery in Argentina, although they're still dealing with a little bit of weather issues. And as we go into 2024, 2025, we get past this season. Our assumption is that Brazil, we will absorb that stranded corn that's been putting pressure on the commodity and that they'll be back to more of a typical, call it, a recovery kind of a flat. We'll assume more like flat to slightly up low single-digit on corn area next year. And in terms of Asia-Pacific, very small for us in Seed. We do business in specific countries there. I'd say in the ASEAN countries, heavy dependence upon the El Nino effect and what that does, local weather conditions, markets are generally strong, just sort of weather-dependent. Asia-Pacific -- or excuse me, India or South Asia healthy market, I'd say, good demand for corn and oilseeds there, which is hybrid mustard. And again, a little bit of weather dependence there as we go through, but fundamentally strong and businesses are in a good spot for us.

Robert, CP?

I'll walk around CP. We will start over in EMEA this year and moving forward, we're seeing a good pull on our high-technology molecules and the new products over there. And with the challenges that you see from a CP, I guess, regulatory environment, social pressures in Europe, they have a special challenge that we don't have everywhere else yet. And our products are doing very well there. When you think about some of the products like [Indiscernible] that is that is a herbicide that is in the cereals area. There is one that's doing very well. And the low use rate of that is something that plays to the environmental regulations there. This is the one you think about a sugar pack, it covers two hectares and the technology that's going into that. The other thing in Europe that is going to be an opportunity for us as we move forward is the acquisitions around the Biologicals and the growth that we'll begin to see in Europe as we progress over the next few years with registrations and new products there. It plays right into the need there, especially in the fruits and vegetables market of Europe, there is a big need for new technology for these growers. And so we're seeing good progress in Europe. We expect we gained market share this last year, and we're positioning for a good year this next year as we move forward. Shifting over to Asia, as Tim said, the weather there has been a challenge shifting from -- into El Nino from La Nina. And that has put India planted acres this year down, but those will recover. This is a shift in weather, and we will see that rice planted acres rebound this next year. The thing about Asia is…

Thank you. We'll take our final question from Joshua Spector from UBS.

Good morning. This is Lucas Beaumont on for Josh. So I was just wondering if you could please expand for us on your comments regarding the flow-through of the Seed and Crop Chem costs next year. So, you mentioned sort of more of a lag of higher costs sort of flowing through inventory and into the P&L. So, I mean if you could sort of disaggregate some of that for us into like whether you expect costs to be sort of up or down next year between Seed and Crop Chems and maybe overall, like if you need to split it between first half, second half to help us kind of highlight the lag impact, that would be great. Thank you.

Okay. So, this is Dave. Yes, thanks for the question. So, we're starting to see, as you know, we're seeing the price -- cost of raw materials fall. We indicated in our prepared remarks that we are seeing continued inflation in the third quarter for the Crop Protection business, but that's going to now start to come down in the fourth quarter. And we anticipate, again, early, but we anticipate favorability in 2024 on a year-over-year basis. In both Seed and Crop, it's going to be influenced by inventory turns, which as a result of inventory then translating into cost of goods sold and the timing of that. That's going to be a little bit of a buffer, if you will, against just either spot, ingredient or input costs or spot commodity costs in the case of seed. It will be a little bit also slower to actually translate in terms of cost benefit in the first half of the year just because of that phenomenon. It just takes a while. But overall, we're heading in the right direction. I feel very good and more to come in 2025. So we'll see another lift, another improvement as we look out to 2025.

Thank you. I'd like to now turn the call back to Ms. Kim Booth for any final remarks.

And that concludes today's call. We thank you for joining and for your interest in Corteva. We hope you have a safe and wonderful day.

Thank you. Ladies and gentlemen, that does conclude today's conference. You may now disconnect.