Greetings, and welcome to Nutrien's 2020 Third Quarter Earnings Call. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to Richard Downey, VP of Investor Relations.

Please go ahead. Thank you, operator. Good morning, everyone, and welcome to Nutrien's conference call to discuss our third quarter 2020 results and outlook. On 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 U.S. Security Commissions to which we direct you. I will now turn the call over to Mr. Chuck Magro.

Thanks, Richard, and good morning, everyone. First off, I hope you and your families are all safe and healthy. While most companies and industries have seen an impact to their business due to the COVID-19 pandemic, agriculture has been more resilient than most and is now demonstrating real strength as we head into 2021. This underscores the consistent growth in global food demand even through a global economic and health crisis. The fall application season is well underway across the U.S., as the harvest is ahead of normal. Crop prices have increased due to a combination of excellent global demand and lower-than-expected production, resulting in strong grower margins. Furthermore, fertilizer affordability is high, particularly for potash and nitrogen. As a result, we are optimistic of the fall application season will be good. And we are also positive on the outlook for 2021. Before turning to the overview of our third quarter results and the outlook, I'd like to provide context on the noncash impairment and tax benefit we recognized this quarter. The noncash impairment was mostly associated with our phosphate facilities in White Springs and Aurora. This is based on our expectation for a challenging long-term price outlook for phosphate, caused by structural oversupply from low-cost regions. Our tax rate was lower than usual this quarter due to a combination of U.S. legislation changes, the tax benefit of recognizing noncash impairments and a shift in the mix of jurisdictional earnings. Now turning to our Q3 results. Retail ag solutions reported 13% higher EBITDA in the first 9 months, which included double-digit growth in revenue and gross margin. We continue to deliver strong organic growth and realized the benefits from recent acquisitions. Our third quarter Retail ag solutions EBITDA was down $28 million over the last year, due primarily to the…

[Operator Instructions]. Our first question is from P.J. Juvekar with Citigroup.

So a quick question on phosphates. You took a write-down in phosphates due to structural oversupply. When you take a charge like that, do your auditors make you look at sort of the next 5-year outlook? And there was a CBD case filed by a competitor, which led to higher U.S. prices. Did you take that into consideration? Can you just talk about the timing of this charge, and how do you -- the outlook that led to it?

Yes, Good morning, P.J. So Pedro, our CFO, can answer your questions. Go ahead, Pedro.

So of course, our auditors look into that. We do very frequent reviews of our assets. There was a certain schedule for this. I think the impairment was triggered by a review with the Board of our long-term outlook for phos prices and that was corroborated with a number of different outside sources as well. So it was not only an inside forecast, but also corroborated by outside sources. So we could see that the values we are carrying on our books were no longer supported by those prices and margins into the future.

And just quickly, I know you're going to talk about your climate goals in next -- at your Analyst Day. But I was just wondering, some of your competitors have taken steps with blue and green ammonia and was wondering if you have any initial thoughts on that?

Yes, we do, of course. So look, our ultimate goal is to be a leader in ESG globally. And for that, we have some very big plans that we will start to introduce to the marketplace at our Investor Day. But here's just a quick preview. So we've been working, of course, on a lot of our digital tools, and we think we now have an excellent toolkit, probably the best in the industry to really change the way agriculture is fundamentally conducted on the farm. Now the starting point for that will be, of course, our own footprint. So just to your specific question on nitrogen, yes, we are looking at our nitrogen footprint and our product slate. And what I'd say is, even if you look at our product slate today, 1/3 of our ammonia sales today would be from low carbon. So if you use the phrase blue ammonia, about 1/3 of our sales would already come from that. So we're already a leader today in low-carbon ammonia production. We are looking at green ammonia, like every major player in the industry, and we're working through the technology and the economic issues and [Technical Difficulty].

The next question is from John Roberts with UBS.

Can you hear me? It sounded like things dropped off there?

Yes, Chuck, I think I could not hear a part of it.

Are we both open? P.J. Operator, I think we may have lost Nutrien.

Okay. We'll have everyone standby while we reconnect the audio. Sorry for the delay there. [Technical Difficulty].

Operator, can you still hear me? Pedro Farah.

I'm able to hear everyone else. It sounds like we have just lost the 1 speaker line.

And operator, is my line open as well as P.J.'s?

No. It's just your lines that's opened at the moment.

Funny, because I can hear P.J.

Okay, so let's have everyone stand by. It looks like we're having a little audio difficulty. We're just going to put the conference on music hold, and we'll resume in just a moment. Again, my apologies. [Technical Difficulty].

Hi, everyone. I hope you can hear me now. I'm not sure what happened. We got dropped there. So I'm going to ask Chuck. He had a great answer on ESG, so I'm going to ask him to repeat it. P.J. So go ahead, Chuck.

Yes. Sorry about that, P.J. We had a bit of a technical issue and the call was dropped. So hopefully, everybody can hear me now. And I'm not sure how much you actually caught. But look, obviously, we have big plans to be leaders in ESG and specifically around the whole nature of climate change and sustainable agriculture. And for us, from a nitrogen perspective, we are looking at our footprint and our product slate. And if you look at our existing product slate today, about 1/3 of our ammonia sales would be considered to be low-carbon production. So you can use the phrase blue ammonia, if that's what you're comfortable with. And today, we would be a leader in blue ammonia production. We are looking at green ammonia options. We're working through the technology and the economic issues. And at the right time, we'll have more to say about that. But that really -- from an overall climate change impact perspective, that's just table stakes. If you look at how Nutrien is structured probably different than other -- our other peers is we're very uniquely positioned to really change what happens on the farm because of our integrated business model. And that's really our objective is. We want to -- and we have been investing significantly in building tools and technology to help farmers really sequester carbon and to monetize that. So we think we've built just a phenomenal product slate right now, and we'll be talking more about that, of course, soon. And our overall goal is just to help farmers sequester carbon and to monetize that because that's really how agriculture needs to evolve over time to help with climate change. So that's a bit of a preview of what we plan to roll out on November 30 at our Investor Day, and I'd encourage you all to participate.

The next question is from John Roberts with UBS.

Last quarter, Mosaic was talking about the potash market entering a new up phase here. While Nutrien's comments last quarter, I think, were much more restrained. There's another quarter of sequential improvement, make you more optimistic than you were last call. It sounds like you're pretty optimistic about 2021 overall.

Yes. John, so look, we're certainly more optimistic overall at the end of the third quarter than we were at the end of the first and second quarter. And it's further reasons we outlined in the prepared remarks. We've seen crop prices rally. Six months ago, we were talking about sub-$3 corn. Now we're talking about $4 corn. Inventories have tightened. And demand around the world for crops is increasing substantially, including in China. So we are feeling better and certainly more confident as we enter 2021. Now specific to potash, yes. I would say, look, if you look at overall the potash fundamentals, they've improved throughout this year. Certainly, when we think about demand, demand is up about 2 million tonnes. That would be our guess today. So that has really been a nice event in the industry. And we think 2021, demand will continue to grow. We also think that globally inventories are where they should be at this time of year. And so what we think will happen is that you're going to see the potash market continue to grow. There is a little bit of more new supply that needs to come into the market, but the growth should easily absorb that. And if you look at Nutrien's position, we said very clearly on the prepared remarks that Canpotex is not shipping product into China now that the contract has expired. We do believe that inland inventories are low in China and that they need the product. And potash domestic pricing in China is quite a bit higher than the contract pricing. So all this bodes well, I think, for a good contract negotiation as we enter 2021. And overall, I think we're seeing demand not only in China, but in all the core markets for potash. So yes, we're feeling a little bit better about the potash market. And for us, we are also focused on our costs. So another quarter of $52, $53 cash cost. It shows the integration that we've done since the merger and the investments that we've put into the potash business. And I think we're well prepared to continue to focus on low cost. And as the market grows, we'll be able to put more tonnes into the market at lower cost. So we like that position as we head into 2021.

The next question is from Jeff Zekauskas with JPMorgan.

Can you let us know what the capital expenditures are for the retail business? And whether they changed very much over time? And secondly, you're differentiating Retail more and more. It's now 70% of the revenues of the company. Do you ever revisit the question of whether Retail should be separated to increase shareholder value?

Good morning, Jeff. So I'll have Pedro talk a little bit about CapEx, and then I'll come back and answer your second question. Go ahead, Pedro.

Yes. So in relation to CapEx, we, of course, guided between $1 billion and $1.1 billion for sustaining capital. A good portion of that is actually NPK. The Retail is a bit less. And this year has been coming a little bit lower than normal due to COVID restrictions, where we couldn't do some of the turnarounds because we couldn't crowd some of the spaces that we had for that. So we are trying to recover some of that next year. We're guiding to be approximately $1.2 billion. In terms of investment capital, we are still leaning towards more Retail, more digital and looking more at Brazil. So that continues to be the preference in terms of capital allocation for our investment capital.

And then just on your question on whether it's a revisit or a look at how the company is structured, so what I would say there is we do look at all of our businesses. We look at the portfolio. We're constantly optimizing our overall portfolio. And when it comes to the specifics around the integrated model, we actually look at that with some frequency. And we monitor some of the parts, of course, as well as other valuation metrics that we have. And it's not only the management team that does this. We put this in front of the Board with some frequency, just to ensure that we've got the right strategy with the right structure to drive long-term shareholder value. What I'd tell you right now, though, is that when we look at the market conditions, the volatility and how our company has performed relative to other players in the crop input space, we would say that the integrated model has shone through. And that if you look at our free cash flow and our earnings, we've been a much more stable investment than many of our peers because of the way the company is structured. And then if you look at how we have allocated capital, the reason we have the dividend policy that we have as Nutrien is because of the integrated model. And at this point, in the market, whether it's the economic market or the industry that we're operating in, in terms of crop inputs, we have a really attractive dividend policy. It's very stable. It's growing. And with interest rates the way they are today, it's a very attractive investment for shareholders. And many of the shareholders that I talked to love this model where at the bottom of our cycle, which is where we think we are today, shareholders are getting paid a very healthy dividend to wait for the market to recover, which we hope now is on our doorsteps. And then as the market does recover, we still have significant leverage to the upside. So the integrated model, I think, has been proven to show that we have less downside risk and still significant leverage to the upside. And I think most shareholders would agree that, that is a unique combination for companies in the material and industrial space.

The next question is from Chris Parkinson with Crédit Suisse.

I just want to drill down a little bit more on the potash front. It does appear that certain markets are actually really beginning to turn throughout Asia. And it appears that you're confident in a rebound in China. So just in your overall analysis of the complete region, heading into '21 and '22, coarse grains, oilseeds and even on a forward-looking perspective, FMV, how should we be thinking about the regional demand dynamics? And how does that filter into your general views, which you're articulating going forward? Do you think there's upside your estimates?

Good morning, Chris, maybe I'll have Ken Seitz, leader of our Potash business just quickly go around the world for you and give his perspective. Go ahead, Ken.

Great. Thanks, Chris, and thanks, Chuck. Yes. So Chuck talked about China and why we're confident there, and that's owing to, yes, some inventories that are a bit above 3 million tonnes at the moment, but we're seeing strong demand there into the fall. And it's reflected in the domestic price, low inline inventories as well. So as the lowest potash price market in the world, we're confident about good contract negotiation in 2021, and we expect demand, as usual, to be robust in China. India, we're going to end the year with lower inventories year-over-year than we've seen, lower than historic averages. India has been a great year. And into the fall season with their kharif crop, we expect that Indian farmer economics will continue to be very good. And so we expect strong demand in India in 2021 as well. Indonesia and Malaysia, you can see that the palm oil price is now north of MYR 30 to MYR 100 per tonne, and that bodes very well for the plantation owners in terms of potash affordability. So we're expecting growth in Southeast Asia into 2021. The Brazilian market continues to be very strong as well. And again, in 2021, we expect some growth there. But the farmer economics and farmer affordability for potash are just excellent in Brazil. And then finally, in the U.S., we're having a very strong fall into the U.S. We have a great weather, great farmer affordability, and we're seeing strong potash application into the fall. And so that teases up well for lower inventories across the board and then into 2021, expecting -- yes, demand growth, as Chuck said, and favorable pricing as well.

The next question is from Jacob Bout with CIBC.

So you trimmed retail EBITDA guidance for the year. Can you talk a little bit about what's driving this? Is this just margin pressure? I know you talked about competitive pressure in Crop Protection. And then if that's the case, is this the new normal?

Yes. So Jacob, I'll talk about guidance, and then Mike can give you -- Mike Frank can give you his perspective on what he sees going forward towards the end of the year and then into 2021. So look, overall, what we did with guidance is we just took the top end of the EBITDA guidance range down. There were some minor tweaks in potash and nitrogen. Potash was raised modestly because of higher volumes and prices as the last question was addressing, and nitrogen was lower just modestly because of pricing and then slightly higher gas costs. Our biggest change in our guidance overall was to Retail. And that is a bit unusual for Q3 in Retail. But I think that this year what we've seen is, if you look at why we lowered the guidance in Retail, there are 3 drivers to that. The first is the lower planet acreage. So the USDA was still tweaking their numbers as late as of October. So we were expecting, and I think many others would be expecting higher planted acreage in -- throughout the year. And we -- now we know that we had a softer Q3 because of that. But also crop protection, application in the third quarter was lower. We had dry weather in the corn belt and not a lot of pest pressure. So that was another driver. And then the last topic, which I did introduce in my prepared remarks, which is we have seen some deflationary pricing in the crop protection market because of some competitive pressure in the upstream competitors. And that when we combine all that, what I would say to you is that we certainly think that most of this is just Q3 specific. But I'll have Mike give his view on crop protection as we get through the rest of this year and into 2021. So go ahead, Mike.

Yes. Thanks, Chuck, and thanks, Jacob. Yes. So look, if you look at our 2020 crop protection margins, obviously, they were strong through the first half and deteriorated in Q3. And as Chuck just mentioned, I mean, a big part of the Q3 impact was the fact that there was lower, especially in the corn belt, insect and disease acres for us to treat. The channel, ourselves included, were loaded up with inventory. And so it ended up being a hypercompetitive market. And we saw the margins deteriorate because of that. I think that's a unique event this year. We haven't seen that in the past. And so I wouldn't expect that to repeat. The other impact that we're going to see through the whole year is just the impact of Ruralco on our crop protection margins. Like if we look at the year-to-date Ruralco crop protection margins, they're about 13%. And typically, our Australia margins are close to where we have globally. They're in the 20% to 22% range. So with Ruralco, we had to sell off the existing inventory and the purchase commitments that they made for the 2020 season, we're pretty much through all of that inventory. And so as we look towards 2021, we'll also have Nutrien ag solutions costing across our whole Australia portfolio. And so that's also going to be constructive to margins as we look forward into '21.

Our next question is from Steve Byrne with Bank of America.

Yes. I was curious about whether there's anything structural about your phosphate assets that led to the write-down. Is there just potentially subscale at Aurora and White Springs or any technical issues there? Or do you just see the recent run in global prices is unsustainable?

Sorry, operator, it seems we're having technical issues again. Could you put the call on hold? We're back in if you can just repeat the question for us.

Sure. The question was about your phosphate assets and whether there's anything structural or technical or scale related at White Springs and Aurora that contributed to the decision to write-down the assets? Or is it solely a longer-term outlook on phosphate supply and demand that might suggest the recent run in prices is unsustainable?

Well, look, if you think about what we've done since the merger in our phosphate business, part of the synergies that we delivered through the MOE was related to optimizing the phosphate businesses that the 2 prior companies had. And so we moved from 3 facilities to 2. We increased operating rates, lowered our costs substantially. And all of that helped, and thank goodness that we did that. What we -- the reason for the impairment, to be very candid though, is that we have a view that the market has a lot of fundamental oversupply in low-cost jurisdictions around the world. And that supply will continue to increase. And so when you look at our footprint in the United States, these assets are strong regional players, but they're not world scale. And so when you put all of that together, the way the process is conducted by our finance organization with our outside auditors, that's what triggered the impairment. When we look at this from -- our focus now for our phosphate business is really, we're going to continue to drive our costs down and diversify the product slate, which we've done over the last 3 years, and we'll continue to look for opportunities. But this business now, I think when we look at it, we just fundamentally believe that the long-term outlook for the phosphate business is very different than, say, the potash or the nitrogen business, and that's taking all of this into consideration is where we landed.

Our next question is from Joel Jackson with BMO Capital Markets.

You're talking about palm oil. So if some of the renewable diesel forecast, bullish forecast like in next year or two, you would think that, that would lead to a lot higher palm oil prices and that should lead to a lot of potash demand in Indonesia, Malaysia, Southeast Asia? You spoke how things are improving upon all side, but I think it's been surprising that potash prices really haven't risen in Southeast Asia. So can you speak about some of that long-term bullishness? Does that play out in potash? When does it happen? Anything you can help -- you could add would be helpful.

Yes, Joe. So what I'll do is I'll have Jason Newton, our Chief Economist, just address the palm oil dynamic. And then I'll give you a couple of comments on the broader potash industry. So go ahead, Jason.

Good morning, Joel. Yes, we've seen a combination of supply and demand factors really helped out the palm oil market since bottoming in May. So we're up around 50% since that time. Part of it is supply and migrant labor hasn't been moving to Malaysia, which has had some negative impact on production and availability from there. It's also demand driven. So we've seen strong demand in China. As mentioned, India demand has been strong as well. And then we also have the biofuel dynamics, which I think is supportive as we look longer term. I think if you look at how the prices have performed in that market, it always lags what's happening in other spot markets, especially the granular spot markets in Brazil and the U.S. And so we never saw prices go as low in Indonesia and Malaysia, they did in Brazil. And they haven't increased by the same amount. But if you look at the relationship, where they are today versus the prices in Brazil, it's more along the line than where it has been historically. And I think given the fundamentals in that market as we look toward late 2020 and into 2021, there's certainly a lot of fundamental support for prices in that region.

Yes, Joel. So I covered the potash, our view of potash, I think, pretty well globally from a fundamental perspective there. The nuance then, if you go back to China, what we're seeing in China, though, I think and it's early days, but we think there's some really interesting structural changes happening there. There's good demand for grains and oilseeds. You can see corn and soybean imports well above the historical levels. And China inventories have been depleted. So when we look at this and we see China pricing for potash, but also for food, it's much higher than the global benchmark prices. So what's happening is if you look at African swine fever, which was a major headwind for the industry last year, now that's becoming what we think a structural tailwind because as the Chinese rebuild their hog herd, they're doing it with, what I would call, professionalism and commercial aspects around the world and so they're bringing in professional commercial feed lots which are going to use a lot more crops. And I think that's a safer way to grow these animals, but it's also, I think, going to drive, I think, a change in demand for crops around the world. And so all of this is positive, I think, for crop fundamentals, but also for NPK. And so that's why you've noticed maybe a slight change in our view now, is that we've been watching this for the last, I'd say, 6 to 9 months. And there's still some more to kind of understand as this unfolds, but we are more optimistic today than we have been in the last 2 or 3 quarters.

The next question is from Andrew Wong with RBC Capital Markets.

So just wanted to ask a question on nitrogen. I don't think we've covered much of that on the call. Regarding the nitrogen cost curve, it looks like there's a lot of moving parts here with the energy prices, oil is weak, nat gas prices are rising globally, coal prices look like they're going up in China. Just what's your outlook for the cost curve over the next 6 to 12 months? And more specific to Nutrien, obviously, AECO gas has gone up, but you still get a pretty good margin there. Can you just maybe give us a little bit of a preview into 2021, a bit on how that segment might play out?

Sure, good morning, Andrew. So look, I'll stay at the high level, and then certainly, we can unpack this, if you like, or we can take it off-line. But what we've seen in the nitrogen fundamentals is sort of that the recovery has probably been pushed out by about a year or so that we had originally thought. And if there's one part of our business, but also the ag industry that has been impacted by COVID, it is the nitrogen industry. The rest of our businesses have not been really overly impacted. There's been puts and takes around crop mix and things like that. But the nitrogen industry, because a part of it is industrial and it goes into the general economy, what we've seen is that global demand overall for nitrogen is going to be up modestly, I'll call it, flat. Good demand growth in ag, but of course, declines around the world for industrial nitrogen. And then some of the new production that was intended to come online late last year and then earlier this year, that also has been pushed out. So as we look at 2021, our view would be that we're going to see growth in nitrogen next year in ag, but also in the industrial complex as the broader economy recovers. The new supply will come online. And what we would say is that 2021 from a nitrogen perspective is probably more balanced for 2021 than we had originally thought. As compared to potash, where we see very good demand growth in potash, there is a more -- some supply coming on in potash, but we think that the supply/demand in potash will tighten next year. And we think that nitrogen it will be more balanced within -- good growth in 2022 and 2023 and beyond that.

The next question is from Duffy Fischer with Barclays.

Question just around China, in particular. You had mentioned that potash prices internal are higher than global prices. I think you can see the same thing for corn. And it's been a while since you've seen that kind of delta where there's more value in ag inside of China. So maybe if you would take a first cut across NPK, whether they're a net importer or a net exporter how you think that net import/export number changes next year relative to this year for China?

Okay, good morning, Duffy. I'm going to have Jason Newton just go through that for you.

Good morning, Duffy. Yes, it's a good question. And I think if you look at the ag outlook in China, it's definitely a lot stronger than it has been in some time. And we think that supports fertilizer consumption within China. I think if you look at the numbers for this year, we've seen that across all 3 NPK. So looking at the export balances, we expect Chinese urea exports this year will be in the 5 million tonne range, so roughly in line with where it was a year ago. And as we look toward next year, the combination of increased demand domestically and some continued supply reductions in the domestic market, we'd expect that domestic -- the exports will decline. So probably in the range of 1 million tonne decline in Chinese exports of urea in 2021. Phosphate, we've already seen lower exports this year, and we expect to continue that same trend of increased consumption domestically in 2021, which should reduce the export surplus there. And then on the potash side, we have seen increased domestic consumption in 2020. Shipments are down. As we look towards in 2021, we expect a modest increase in shipments, depending on what happens with imports as we get into late this year, but strong domestic consumption growth again in 2021 in China.

Your next question is from Vincent Andrews with Morgan Stanley.

I just want to drill down a little bit more into the natural gas equation on the AECO, Henry Hub piece. Just looking at Slide 21, we've always talked about the AECO advantage and that chart generally shows it. But more recently, since maybe the end of last year, that advantage has narrowed. And just curious what you think is causing that? And then if we do see a further spike in Henry Hub, whether you'd anticipate AECO following it or not?

Okay, Vincent, good morning. Raef Sully, our Head of Nitrogen and Phosphate, can take that question. Go ahead, Raef.

Thanks, Chuck. So maybe just to reiterate some things Chuck mentioned. Globally, we're seeing prices increase. We're seeing LNG come up, that's pushing European gas prices up to a more natural position, which is pushing them to the right of the curve. AECO and Henry Hub are up. We still think that we'll see an advantage of AECO through next year. There's a lot of production available there at the current prices that you see. So we think it's -- it will still be advantaged to Henry Hub. Likewise, I think there's some uncertainty around Henry Hub at the moment just because of the election. But despite that, there is a lot of capacity available in that 275 to 325 range. So again, Henry Hub and AECO may come up a little. But the amount they come up is capped compared to the LNG prices and prices in the rest of the world. So we think our footprint will have a pretty advantage position to some of our other competitors that have enjoyed low gas prices recently.

The next question is from Ben Isaacson with Scotiabank.

You guys have given a very clear outlook on your views with respect to nitrogen over the midterm, at least from a noncontrollable point of view. When it comes to controllables, what is your strategy for nitrogen? You've talked in the past about debottlenecking. What about product mix shifts or lowering costs or potentially offshore investments, consolidation, et cetera?

Yes, good morning, Ben. Raef, do you want to take those questions, please?

Yes, no problem, Chuck. So Ben, look, on the controllables, there's a number of things that we're focused on here. The first is starting with reliability of the equipment. We've had a big push in the last 3 years to improve the reliability of the equipment by making sure that our sustaining capital is focused on things that matter. You've seen that come up now. We're on track this year to have -- to reach a high watermark around at 93%, 94% capacity utilization. We're going to try and push on beyond that in the next few years. We also have invested about $300 million in increased capacity that has allowed us more flexibility with downstream products. So that's allowed us to move the ammonia molecule into urea and UAN, which has served us well and also ammonium sulfate. We have identified additional, what I call, brownfield expansions. These are very low cost compared to greenfield expansions. And these brownfield expansions are focused on, again, product mix, flexibility on a regional basis. So looking at the individual regions we're at and where we need that extra flexibility. They are also focused on energy efficiency, so again -- and reliability. And so you should see us continue to be able to improve the reliability of the equipment we have. And also get a little more flexible, I mean, our product mix that will allow us to handle some of the variability we see in the application windows.

The next question is from Adam Samuelson with Goldman Sachs.

So the question is on retail. And really, as we think out to 2021, the crop price environment and [indiscernible] environment is considerably more favorable, maybe a little more skewed to soy and corn planting at current prices. But just trying to think about the Nutrien operating leverage to that in retail next year. Do we see a slowdown in OpEx growth as we kind of lack Ruralco or is there an additional step-ups in investments in digital and Brazil that mean that we could still see OpEx grow as fast or faster than gross profit next year?

Good morning, Adam. Mike, do you want to take that question?

Sure. You bet, Chuck. Good morning, Adam. So let me talk about OpEx, firstly, this year. The vast majority, over 90% of the OpEx increase this year is coming from acquisitions, in particular, Ruralco, but we also had a couple of medium-sized acquisitions in Brazil. And so that's where we're seeing OpEx growth this year. Right now going into 2021, we don't have those big acquisitions at this time that are going to have that same kind of impact into our 2021 year. And so I would expect a more stable OpEx growth going into next year, probably less than inflation. Look, in terms of grower sentiment, you're right, whether it's the U.S., obviously, it was an early harvest, good yield, strong prices right now. And good government support programs. And we're seeing that play out. Our seed bookings are up. We've had a record October from a tonne standpoint in terms of getting applications, fertilizer on the ground. And we've also seen a record number of soil samples come into our Waypoint Analytical lab network. And so we are seeing growers really starting to think about how do they make investments into the '21 crop that are going to really be focused on maximizing yields. Of course, it's the same in Brazil, grower margins are extremely strong. And in Australia, they're just about to harvest what looks to be a really good crop and moisture conditions are once again looking positive going into the '21 season. So across the board, I would say all those things are setting up right now for really strong grower fundamentals. And when that's the case, there is a positive impact, of course, on our retail business from product sales margins. And obviously, there's a lot to play out in terms of planted acres for '21 between corn and soy. But as Chuck mentioned in the prepared remarks, there was about 8 million acres that didn't get planted this year because of revamp plant. And so again, I think as we're looking at the '21 season, we're expecting a lot of those acres to come back into play in the U.S. as well.

The next question is from Jonas Oxgaard with Bernstein.

We talked a lot about China and the outlook for pretty strong potash applications. But are you thinking about China differently in the strategic sense this upcoming year? I mean it feels like we're repeating the same story every year of sending too much volume through China and then negotiating from a position of weakness?

Yes. Look, I think the way we think about this coming contract with China is fundamentally different than what happened over the last couple of years. So if you recall, we signed and we being Canpotex signed a contract only until October. So it wasn't even 12 months last time. I think we made it very clear that we fundamentally believe that the contract price was not sustainable at that level. And Canpotex is now not shipping any volume after the contract in October. So I think that, that is a very important differentiation and distinction. And then if you look at how we're forecasting our volumes into 2021, and we'll talk more about that as we enter the new year is, we don't -- we're not relying on China for a lot of volume early in 2021. And then the comment that we've already made a couple of times today, the China domestic potash price is much higher than that contract price. So in my eyes, I think we have set up a different dynamic. Now this is always going to be a tough contract negotiation. People are constantly referring to what they can see at the port inventories, and that's the most visible and transparent number. So the Chinese understand that. But from my perspective, what I would say is that I believe that there's only one way potash prices are going to go in China, the question is just by how much.

The next question is from Michael Tupholme with TD Securities.

I know you feel very strongly about the robustness of your digital platform. I'm just wondering if you can talk about the strength you've seen in that platform, you've well exceeded the targets you put out? And I'm just wondering if you can talk about what you think it is that's allowed you to do that and how you think about that going forward?

Sure thing, Mike Frank, will you take that question, please?

You bet, Chuck. Yes. So Michael, obviously, the platform has exceeded our expectations this year in terms of revenue that's come in on the digital portal. Obviously, that was aided by COVID, where we got into the March busy season. And we wanted to make sure that both our employees and our customers stayed safe and healthy. And so we really turned to the digital tools and leverage them in that window. But the good thing is we've seen that continue through the third quarter and even in the early start of the fourth quarter. So look, I think the benefits, there's really two big categories of benefits that we're seeing. Firstly, it's around efficiency. So our best sales agronomists that are at capacity doing it the old way. With these digital tools, they're able to increase the number of acres that they can serve by probably 25% to 40%. Just because that these tools allowed them to reach their growers and helped the growers make decisions in a more convenient way. And we're also seeing a less duplication of kind of back office work. And so there's also a leaning down of the administration that we're seeing, and we can anticipate as we do more and more transactions on the digital portal and get more payments through the portal that it's leaning down our administration. The other big area of benefit is really, I would say, both grower convenience as well as our sales agronomists convenience. And we're seeing, for example, growers that are engaging online are churning less. They're more likely to buy multiple shelves from us. And so we do see this as an avenue. I think it's early days, but it's an avenue for us to drive organic growth as well.

Operator, we have time for just one more question.

Our final question is from Michael Picken with Cleveland Research.

Just wanted to go briefly through the seed and crop protection market. You mentioned that, that's causing some pressure in terms of your retail margins. How do you see that evolving into 2021? And maybe you could talk about kind of the competitive dynamics of seed a little bit right now with the price cards now out?

Good morning, Michael. Mike Frank?

Yes, Michael. So look, I think we already talked about the crop protection market and the impact this year, in particular, the impact of Ruralco and the mix effect that Ruralco had on our overall margins as well as just a very competitive Q3 that obviously lowered our margins in the U.S. in Q3 as we sold through the inventory based on the smaller market. Now I would say on the seed side, look, if you look at our margins year-to-date, our margins are strong on seed. They're strong because we've performed well with our proprietary products. Seed portfolio, and I would say we've never had a stronger proprietary product seed portfolio than we have going into the '21 season. So we feel really good about that. And right now, again, I think based on positive grower sentiment, growers are focused on the seed that's going to help maximize yields. So that they can take advantage of $10.40 cents soybeans or $4 corn. And so we're seeing actually in soybeans, probably a trading up, less roundup ready two soybeans, less roundup ready by LibertyLink soybeans. And we think that our overall ratio of both Enlist and Xtend and XtendFlex beans are going to be up this year. And so it's a competitive marketplace. But again, growers are focused on making sure they can get the best seed. And really, it's the same on the corn side. We're not seeing extraordinary competition, I would say, right now in seed. I mean the market is focused on getting the best seed, making sure that we have inventory of it. And that's where the focus is right now. It's more so there than it is on, I would say, on the price equation.

So it's Richard Downey here. Thank you for everyone who dialed in. My apologies for the technical difficulties this morning, but we are available for any follow-up questions that you may have. Thanks for joining us. Have a good day.

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