Operator: Greetings, and welcome to the Nutrien's 2021 Second 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 reminder, this conference is being recorded. I would now like to turn the conference over to Richard Downey, VP of Investor Relations.

Richard Downey: Thank you, operator. Good morning, everyone, and welcome to Nutrien's conference call to discuss our second quarter 20210 results and outlook. On the call with us today is Mr. Mayo Schmidt, President and CEO of Nutrien and Mr. Pedro Farah, our CFO.

We also have the Heads of our Business Units, Ken Seitz for Potash, Raef Sully for Nitrogen and Phosphate. For Retail, we have Jeff Tarsi and David Elser and Mark Thompson, who leads our Strategy and Sustainability group. And of course, our Head of Market Research, Jason Newton. As we conduct this 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. securities commissions to which we direct you. I will now turn the call over to Mr. Mayo Schmidt.

Mayo Schmidt: Well, thank you Richard. And I do want to pause to comment before I get into my prepared remarks. The Nutrien's team and I do want to wish you and your family all the best on your planned retirement, which will occur, of course, later this year and certainly we recognize you and thank you for your 25 years of service at Nutrien. You have been an outstanding member of this team for many years and have enjoyed an exceptional career. You are appreciated and you will be missed.

I know you are very pleased to be passing your torch over the Jeff Holzman, who I know, many of you already know as our Vice President of Investor Relations. So good morning, everyone, and welcome to Nutrien's second quarter earnings call. Today, I will recap the actions our teams have taken to fully benefit from excellent agriculture fundamentals and the demonstration of the advantages of our global integrated business structure, which together allowed us to execute on delivery of record performance for the quarter and for the first half of the year. This morning, I will also provide an update on the outlook and decisive actions that we have taken that allowed us to increase our annual adjusted EBITDA guidance to a midpoint over $6 billion for 2021, an increase of over 33%. Furthermore, we will illustrate the momentum that we will expect to carry forward well into 2022 and how the Nutrien team are enhancing our unique market position to drive value.

So first of all, I would like to thank all our employees for the dedication and commitment they demonstrate each and every day in support of our grower customers in the more than 40 countries that we serve and as we work to feed a growing world. These efforts are especially apparent through the busy application seasons when our approximately 3,600 crop advisers are working directly with our grower customers as we produced and safely delivered nearly 30 million tonnes of potash and nitrogen and phosphate globally. Myself, the Board and all employees are very proud of how our potash team has responded to increase production significantly from our flexible, reliable, low-cost, six-mine network in the second half of the year to ensure our growers around the world have the potash they need to meet the ever-growing demand for food. So now turning to our results. Our first half adjusted EBITDA was over $3 billion, up 36% over last year's level.

We delivered excellent results across all businesses, geographies and for most products and services. The key driver was impressive team execution with our well-positioned assets, higher prices for crop and fertilizers and robust global demand. Our business also generated notable free cash flow of $1.9 billion in the first half of the year. Nutrien Ag Solutions, our retail operations, achieved a 24% year-over-year increase in adjusted EBITDA for the first half of 2021. In fact, almost all of our retail metrics showed significant improvement and we are on track to meet or exceed our longer-term targets ahead of schedule.

When we look across our Nutrien businesses, we generated a combined $1.2 billion in adjusted EBITDA in the second quarter, year-over-year potash earnings up 48% and nitrogen and phosphate businesses up 45%. The increase was due to continued focus on managing costs, making operational excellence toward everything we do supported by stronger pricing. Our wholesale marketing and sales team execution was outstanding. Our team ensured, we did not get overcommitted too early and optimized our retail distribution system. We evaluate our retail business on a first half and second half basis, representing the spring and fall application seasons.

In the first six months of this year, we witnessed strong year-over-year performance across all geographies and the majority of our product shelves. Adjusted EBITDA in the first six months in the U.S., Canada and Australia were up over 20%, driven by organic growth, while our South American team’s EBITDA was nearly double last year, driven by their strategic acquisitions. By product shelf, the biggest increase in earnings was for our crop nutrients with per tonne margins benefiting from well-placed inventories in a rising fertilizer price environment as well as record sales volumes. Volumes for crop protection and seed were higher year-over-year, helping drive a significant increase in gross profit. The increase was also due to improved proprietary product performance across all geographies and products with profits from all proprietary products up an average of 13% year-over-year.

We also delivered excellent retail performance relative to our long-term targets, with adjusted EBITDA percentages surpassing 11.4% compared to 10.3% in the first half of last year, partially supported by strategic fertilizer procurement. Our working capital as a proportion of sales and cash operating coverage far exceeded our long-term target and our average EBITDA per location showed significant year-over-year improvement. The ongoing progress in these metrics is made possible by our continued focus on meeting growers' needs, while also rationalizing our network, optimizing working capital and expanding our proprietary product line. We also reported $1.6 billion in digitally-enabled sales in the first half of the year, nearly double the same period in 2020 and processed approximately 1.5 million grower payments through our system. We also continued to grow our retail business in Brazil and recently announced an agreement to acquire Terra Nova, the fourth value-enhancing Brazilian [ph] acquisition in the past 18 months.

With this transaction, we operate 33 branches in Brazil and are well on our way to generating $100 million in run rate EBITDA by 2023. Our retail team continues to demonstrate exceptional performance across the board in all geographies in which we operate. Our potash group performance has been outstanding. Ken and his team responded to market conditions and have fully delivered commitments to our customers while taking action to increase sales and production significantly to ensure our customers have the product they need. We are the only producer globally with a capability to respond.

We delivered record volumes in the first half of 2021 and are on track to achieve a full year record. We are focusing all-time high global potash consumption in 2021 due to exceptional spot market demand in the U.S. and Brazil and the Southeast Asia, where we saw a significant market recovery this year. The demand has positioned Canpotex to place greater emphasis on these higher netback markets compared to the contract markets of China and India. Overall, we project to produce nearly 14 million tonnes of potash in 2021.

In fact, by the fourth quarter, we anticipate Nutrien to serve potash production to approximately 17 million tonnes on an annualized equivalent basis. We will continue to be proactive and flexible with our operating rate. Raef's teams in nitrogen and phosphate delivered excellent results in the first half, capturing much stronger prices and for nitrogen achieved a 92% ammonia operating rate despite increased turnaround activity and weather-related challenges. Phosphate margins this quarter reached an impressive $195 per tonne and nitrogen margins averaged $182 a tonne, both were up almost 60% year-over-year despite higher input costs. We continue to benefit from the brownfield expansion projects completed over the past few years, which have both expanded production capability and increased product mix flexibility.

These results also demonstrate our ability to leverage the competitive advantages of our extensive production and distribution network to execute on emerging market opportunities. For the near term outlook, there is a wide range of crop conditions across North America. Crop maturity is generally ahead of normal which bodes well for the fall application window. We may see some pull back on fertilizer applications in severe drought areas such as Western Canada this fall. Overall, in North America, we expect solid crop input demand supported by continued above average crop prices.

In Australia, very favorable weather conditions also continue to support strong crop input demand. Some ongoing weather challenges in Brazil have impacted yields for certain crops this year, but the outlook for next season is a further expansion in seeded acreage, which will support demand for all crop inputs. For fertilizers, tee current price environment is a result of robust demand for all nutrients, driven by supported agriculture industrial market fundamentals. We expect these market dynamics will continue to support prices in to 2022. That said, fertilizer affordability is something we watch closely.

But even at today's elevated prices, most fertilizer to crop price indices are close to average levels and grower margins continue to be very favorable into 2022. We expect global potash demand in 2021 to be at record levels between 69 and 71 million tonnes and global inventory levels in key regions to remain very low. There is no news at this point about a potential contract with China or India. However, we continue to believe that China will need to negotiate a new contract before the end of the year as their inventories continue to draw down as Chinese domestic demand has been seen as robust. Canpotex is already fully committed right into November and will continue to focus on higher netback regions.

We believe the future outlook for our company is excellent. We expect crop prices to remain well above historical levels and fertilizer markets to remain tight. We will also benefit from our ongoing commitments to operational excellence, execution a keen focus on cost and inventory management, continued value-added growth and a strengthening return on investment. As such, we raise our consolidated annual adjusted EBITDA guidance by more than $1.5 billion or over 33% and our EPS by nearly 70%. This is due to stronger earnings outlook across all business lines and executing our competitive advantages.

We believe this positive learning outlook will continue into 2022, further strengthening our balance sheet. We will maintain our disciplined compete for capital approach which includes the potential for further investment in the business, deleveraging of the balance sheet and additional return to our shareholders. Our purpose is to help growers increase food production in a sustainable manner. There is no better example of this commitment than our responsiveness of our team to quickly and safely bring on an additional one million tonnes of potash production to improve access of the support nutrient for growers globally. These actions also delivered significant financial value for our shareholders as the increase in production accounted for approximately 25% of the $900 million increase in our potash adjusted EBITDA guidance for 2021.

Another example of executing in line with our purpose is our feeding the future plan and 2030 sustainability commitments which includes our ongoing focus on improving carbon outcomes. We are reducing the carbon footprint at our facilities, making great progress our industry-leading carbon program at the farm level and our recent announcement on our partnership to develop a marine vessel that is powered by low carbon ammonia as a fuel. Nutrien is committed to ensuring our strategy and operations remain world-class and successful over the long term, which is supported by strong integration and management of ESG risk and opportunities into our strategy in our execution plans. We believe the outlook for Nutrien is exceptional. With crop and fertilizer prices anticipated to remain well above historic levels in to 2022.

No other company is more advantageously positioned across the value chain to be a catalyst for positive change in the global crop production system and help growers around the world and feed a growing world. So I want to thank you for joining the Nutrien team today and we are all looking forward to your questions.

Operator: [Operator Instructions]. Your first question comes from the line of Ben Isaacson with Scotiabank.

Ben Isaacson: Thank you very much and congrats on the beat and raise.

A question for Mayo and Pedro. So you are going to generate $6 billion, $6.5 billion of EBITDA this year. And even if prices moderate a little bit, you will probably do something similar next year. And that's a lot of free cash flow to generate, especially considering you don't have any major capital projects. So in that context and rather than talking about your compete for capital philosophy, can you give us some actual goalpost in terms of what you have planned? How much debt reduction do you want to see over the next 18 months? You have a buyback authorization.

Do you expect to be finished that within a year from now? How much have you earmarked for M&A in retail, whether it's in the U.S. or Brazil? Thank you.

Mayo Schmidt: Sure. Happy to comment on that. And Pedro and I have had those good discussions actually quite frequently and it's an outstanding year, which gives us a number of opportunities, including both strategic and also, as you mentioned, buyback relative to our strategic initiatives.

And so, what I will do is, I will ask Pedro if he will just run us through some of the options that we have in front of us and we are very pleased to be able to have these choices.

Pedro Farah: Yes. Ben, nice talking to you again. To your point, we will continue our disciplined capital allocation approach, which would involve basically sustaining our assets. And at this point, we could have guided for a little bit more expenditure as we are a little bit depressed in the past due to COVID restrictions that we couldn't do what we needed to do in our different facilities.

We have increased dividends earlier this year and we are looking into the balance sheet now that we are above mid cycle prices in terms of opportunities to delever. That very much will depend on how much we will do. It will depend on how we look through the cycle and we would like to position ourselves to have flexibility in the future. So I don't have a specific number for you as we are looking at our various options for the future. But in terms of the compete for capital approach, as you mentioned, we do have options there, too, both organically and inorganically and we already started to deploy that.

You have seen us do some acquisitions in Brazil. We are also investing some of it on our ESG projects for nitrogen and we will continue to look at those in the future. And we are, as you pointed out, we can still have the NCIB option that we will be considering together with all the other ones. So it is a fluid environment here. So we are going to be analyzing our options and we will come back to you with more specific points as soon as we have them and we can tell you in more detail.

Operator: Your next question comes from the line of P.J. Juvekar with Citi. P.J. Juvekar: Yes. Hi.

Good morning. I was wondering if you can just talk about level of inventories in the retail channel by NPK? And where do we stand post to the summer fill?

Mayo Schmidt: Jeff, would you mind taking that question for us, please?

Jeff Tarsi: Sure. I will be glad, too. We can talk about inventory in two different capacities. We talked about crop protection.

I think you want to be more specific on the NPK side of things. And I guess if we look at the end of quarter two, we are probably a little bit higher from a revenue perspective. What we have got in inventory today on NP and K, about $150 million higher in the U. S. than last year.

That's planned as we are starting to load in product today for what we anticipate to be a good fall application season and trying to get some product. When you look at how much product we have to move through our system, we have to get a really early start from a logistics and supply chain side of things with it. And then if you look at that higher inventory value, you also got to give credibility from the standpoint of, we are looking at higher product pricing than we were looking at a year ago as well on it. But we feel really good of where we are sitting right now from an inventory perspective on it and we basically plan to have a pretty normal fall application season. David, I don't know if you want to add anything else to that.

David Elser: No. Jeff, I think you hit the facility side of things quite well. On crop protection, we were just getting ourselves well-positioned for our upcoming fungicide spray. So no, Jeff, I think that's it.

Jeff Tarsi: Yes.

Operator: Your next question comes from the line of Steve Byrne with Bank of America.

Steve Byrne: Yes. Thank you. I just wanted to hear if you had any visibility on where you think third quarter realizations could be in potash in both offshore and North America? Do you have that visibility through Canpotex on how much is already sold forward and at what price?

Mayo Schmidt: Why don't I just make a couple of comments and I will ask Ken to comment as well. We certainly expect to see relatively limited new supply in the next couple of years and the majority of it's going to come from former Soviet Union producers, particularly Eurochem.

And then, of course, there's the issue around the Belarusian political sanctions. So we think we are very well-positioned. We are sold out for a period of time here and continuing to look at these strong prices. And Ken, do you want to fill in some of your thoughts on that?

Ken Seitz: Thanks, Mayo. And yes, thank you, Steve, for the question.

So we do have visibility through Canpotex. In fact, they just released few weeks ago that they are committed into November now. So the remaining volumes to be committed in the year are shrinking. In North America, similarly, we are committed right through October and again, uncommitted volumes relatively small compared to what we are doing for the year. So with respect to third quarter realizations, we can follow benchmark prices.

There's always a lag between what the benchmark prices are being reported at and what we are realizing. And it has to do with the two to three months lag on contracting and delivery. I will also say that in this rising price environment, at times, those reported prices are based on thinly traded volumes. So it does – it could take a few weeks for prices to firm up at that level as well. So, yes, we do have good visibility and certainly we are expecting a strong third quarter.

Operator: Your next question comes from the line of Jacob Bout with CIBC.

Jacob Bout: Good morning. My question is on potash demand and also going back to inventory levels. I guess first, spot pricing for potash, we are back to levels not seen since 2008, 2009. Are you seeing evidence, any evidence of demand destruction? And then maybe if you can just maybe talk a bit about the U.

S.? But what are you seeing in some of your other key global markets for potash inventory at the retail level?

Mayo Schmidt: Well, thanks for that question. Jason is with us today and I think he can offer some really valuable insights into your question.

Jason Newton: Yes. Good morning Jacob. As we look around the world at demand and inventories, I guess it's starting with the spot markets.

We think that what's being sold is being applied to ground. And of course, as we look at the U. S. market, the weather during the fall season is extremely important to driving the fall demand and where inventories end up. But as Jeff said, we are expecting good engagement and just given the affordability right now and the stage of the crop which is vast or ahead of average, we expect a normal application season.

And then as we look at the contract markets, we are really seeing because they are priced out in the market at current levels, inventories being drawn down, both of course within the domestic market and you can see within China that domestic prices have been really firm and almost keeping pace with the Brazilian spot market. So evidence of a really tight supply demand balance there. I will maybe pass it to Ken to see if he has any other comments.

Ken Seitz: I think you summed it up well, Jason. Heading into the fall here and assuming we have a reasonable fall, we are expecting inventory levels to be low, which is, I think, a critical point.

So with our million tonnes committed through October and November and certainly homes through the balance of our volume and lower inventories at the end of this year.

Jeff Tarsi: Hi Jason. I might add one other component to it. We talked about weather. We have talked about timing of harvest.

And I think it's been mentioned a couple of times is crop feels like it's moving ahead a little bit from a maturity standpoint. But the other big factor is yield. And if we look at what's being predicted from a yield standpoint, we are looking at trend line yields or something right at that level. And so what that tells me is, we are going to have a real strong removal rate as this crop comes off. We will obviously be out with our agronomist out on the field doing massive amounts of soil testing and such which should drive, again should drive demand for the fall.

Operator: Your next question comes from the line of Jeffrey Zekauskas with JPMorgan.

Jeffrey Zekauskas: Thanks very much. There really wasn't any change in crop protection margins. Why is that? Why shouldn't pricing be better than costs? And what's your outlook for that business, that sub-business and your retail operation over the coming year?

Mayo Schmidt: David, you take that question. You lead that for our group, please?

David Elser: Yes.

Thanks. And Jeff, appreciate the question. I think our Cp sales volumes and our margins stayed fairly stable through half one, really on the backs of acreage expansion as well as some of our strategic purchasing and the long term relationships with suppliers. The crop protection industry as a whole continues to be pressurized from a generic perspective. And we continue to monitor that globally and look to strengthen our proprietary position to move margins in the right position.

I think going through half one, our upfront margins on our proprietary business was strong and we will look to continue to make progress moving forward.

Operator: Your next question comes from the line of Adam Samuelson with Goldman Sachs.

Adam Samuelson: Yes. Thanks. Good morning everyone.

I was hoping to get some color on retail performance in the first half and specifically in the disclosures there, it says that same store sales adjusted for movements and fertilizer pricing and FX was up 1% on a year-on-year basis. And I guess I am trying to square that with the reported results in the segment overall, which look quite good. But for up 1% on an organic basis, it doesn't actually seem like that much in the context of the market that we have been in. Is that a function of weather in Western Canada and California? Is any additional color there? Because I would have thought there was more evidence to share gain benefits from proprietary products in the reported results?

Mayo Schmidt: Well, thanks Adam for the question. And let me just start with saying, we are very pleased with the 2021 seed selling season.

You are correct that the Canadian crop has really been dry in that area. And we might see some really strong follow-through the next season from them. But we continue to build momentum in seed and we do expect it likely to grow the between half and full share point on seed across the four major crops. And that share growth and acreage increase, we didn't see a lot of shifting between crops or brands. But David, you want to fill in some of that in your area?

David Elser: Yes.

No, I think Mayo, you hit it well. I mean in the context of seeds, it's a major priority of ours to grow share as well as look to strategically gain more of our customers' overall business across our four strategic crops, canola, cotton, soybeans and corn. As Mayo said, we are seeing strength in those share gains going through this first half. Preparation underway heavily for 2022 as we speak. And I think some of the underlying themes in soybeans was, there some price pressure relative to new some herbicide trade launches, but overarchingly our teams worked well through that and gained strength going into this next selling season.

Operator: Your next question comes from the line of Vincent Andrews with Morgan Stanley.

Vincent Andrews: Thank you and good morning everyone. Mayo, I just wanted to ask you on potash. You referenced the $17 million ton run rate that you will reach from a production perspective in the fourth quarter. How should we think about that production run rate going into next year? And I guess I am asking sort of juxtaposition of obviously the capability.

You mentioned affordability and being sensitive to that. But then there's also potentially maybe less Belarusian tonnes coming into the North American market, which are obviously advantaged into from a distribution perspective. So, I recognize that's a few variables. But maybe just philosophically, how are you thinking about how much you want to produce versus how high of a potash price you want to see on a go forward basis?

Mayo Schmidt: Yes. Thanks Vincent.

Well, let me start with I think an important comment that we expect global demand to continue to grow by 2% to 3% a year. So if you do the math on that over the next eight, nine years that's 14 to 23 million metric tonnes. And that's why I would say that Ken and his group are thinking about, as we talked about, the annualized run rate of about 17 million tonnes by the fourth quarter. So we really look at this as the opportunity for our shareholders. But at the same time, there tends to be value destruction when we get to these higher prices.

When we have Brazil sitting at $680, you get to some level of concern whether they will simply mine the soil. So I think the additional for us, the additional production capability could be further leveraged in 2022. But I think that's if the market needs it and then we also have a good line of sight to about another five million tonnes of low cost brownfield capacity. So we are going to continue to invest in already low cost position that we have and leading the industry in that with our flexible mine network. And so our focus this time is going to be on our potash operations and how we are positioned to service the market while being price sensitive.

We are enjoying some prices and we want to continue to enjoy these prices. And that's how we are going to think about servicing our growers to keep them in the game and price accordingly. And Ken, do you want to add anything to that?

Ken Seitz: Thanks Mayo and thanks Vincent. Yes, just a couple of comments maybe. Everything that obviously Mayo said on the fundamentals and expectation of strong demand, obviously, through 2021, but 2022 as well.

I think a critical point is one that we have discussed already and that is inventory levels. And inventory levels at the moment in multi--year lows. And with a reasonable fall, we expect that to continue. On the supply side, we haven't seen any new announcements of additional production other than our own. And if there were to be announcements at these price levels they would have happened already.

Mosaic, we expect we will be back. But I think it's true that while the situation in Belarus and the consequence of the sanctions are a bit unknown at the moment, it does create some uncertainty. So exactly as Mayo said, if our customers are asking for in 2022, we will be there for them and we can surge production beyond 2021 levels.

Operator: Your next question comes from the line of Mark Connelly with Stephens Inc.

Mark Connelly: Thank you.

I was hoping you could help us understand what part of your retail portfolio is being the most impacted in California so far? And assuming this drought continues, how does that impact progress and how meaningful is it?

Mayo Schmidt: Jeff, do you want to take that please for the California market?

Jeff Tarsi: Sure. I would be glad too. Yes. If I look at the California market from an impact standpoint, we haven't seen a dramatic impact. Obviously, the majority of all of those crops are irrigated.

We are all reading it with the reservoir levels are, they aren't very alarming right now. I think the biggest imp0act might come later as we are getting into a fall planning season now. And a lot of that fall planning is going to depend upon how much water they going to release for those growers to use with those planning. We are seeing some indications that they will be down. And obviously, when you are in a very hot and dry condition, that really doesn't create a lot of disease, especially in our permanent crops.

So I would say, probably our fungicide has been affected out the West more so than anything. Our business has actually performed very well considering the circumstances that we have been in out there. But I think we will start to see it a little bit later in the fall as we get into fall planning. And then hopefully we can get some of these reservoir levels up later into the fall and winter with some snowfall that's conducive to our business going into 2022.

Operator: Your next question comes from the line of Joel Jackson with BMO Capital Markets.

Joel Jackson: Hi. Good morning everyone. Maybe you can talk about, when you gave you guidance range for both EBITDA for the year and for potash maybe because it's a very interesting time. Lot of us on this call are talking about a lot of topics right now. There's a lot of uncertainty and a couple moving parts.

So I wanted to know, when take a look at the higher range and lower range, what are the assumption you are making on some of the bigger source of uncertainty? So fall, weather, you talked about it's dry in Western Canada and your fall weather is always important. For Belarusian sanctions, the sanctions, they seem to be at stake. The U. S. and Europe will not relieve the second.

What are your assumptions around BPC's abilities, Mosaic having production problems, but then the production you raised your volumes, than they have said Belarusian problems aren't as bad as they found a he way out of it. And then you have got maybe on the assumption side, you have to make an assumption around, whether there will actually be Chinese fertilizer export restrictions or it's just lost? So when you think of all those assumptions, what are you seeing for the high end and the low end of your range?

Mayo Schmidt: Thanks Joel. Let me just make a couple of comments and you have got a lot of good questions in there and you talk about volatility and that's the commodity business that we are in. I think the fundamentals for us are that we do expect to see strong follow-through. And regardless of what happens with the Belarusians, I think we are still going to be in very strong position.

It just sort of creates an amplifier of the combination of results and the potash that we are capable of bringing on. As to your point, I mean, we delivered a new company record with an adjusted EBITDA of $3 billion in the first half of the year, which is 36% year over year. When you talk about the performance and the earning perspective and our significant increase in guidance with our full year, EBITDA, as you would know, is $6.4 billion. So that's up 70%. But we do see the ability to follow-through with this crop.

I mean, all the signals when you look at the markets you are trading flat there's a demand for corn to be delivered in the nearby, yet at the same time they are deferred. I mean, there's it's not necessarily a big inverse that we are really demonstrating strong corn prices even not only through this new crop, but into the next new crop. So we really see a real opportunity here to sustain these prices for an extended period of time. And when we get into these type of cycles. I mean, it's hard to tell when they end.

They end dramatically and quickly. But if you look at the supply and demand, particularly the supply right now is on the low side. We have got certain countries that are almost down to level of food security in terms of what they have in their inventories, both in crop and in terms of the crop inputs and we are already seeing that with China where they are asking their producers, their production system who hold and look at focus internal to the system. But I am happy to ask some of our leaders here to contribute. Ken, do you want to chime in a bit? And then perhaps Raef, you want to make a comment or bang over to Jason? Okay.

Thank you.

Ken Seitz: Yes. Great. Thanks Mayo. And Joel, I agree there are a number of moving parts in the potash business at the moment and we are talking about some of these on call today.

But I believe the net of those moving parts is that it's created an opportunity for us this year to do 200 million tonnes. I think that's just really a demonstration and testament to our capabilities here. For 2021, we are committed with Canpotex through November and domestically through October. So in large part, the table is set for us. We do have some uncommitted volumes.

So if we look at our guidance ranges, there is an opportunity to do some additional volumes without moving inventories to higher levels, but also price. Prices continues to firm in many markets. And so hence the ranges, but I will say that confidence level in those variances is quite high.

Raef Sully: Yes. And on the nitrogen side, I will let Jason take that Chinese export situation.

I will take basically here in North America. Pricing has remained firm. We thought there would be some raises. It hasn't happened. We think the fundamental is solid.

We think pricing will remain firm through second half across the suite of nitrogen products. And we have committed out through the third quarter at the minute. So as Ken said, the full year is pretty tight at this point. So we are pretty confident that the range that Mayo mentioned.

Jason Newton: Yes.

John. Just to follow up on the Chinese export situation. We have seen several attempts by the Chinese government to pressure the domestic state-owned enterprises. And now this week, we have seen the industry associations, several industry associations step in and put pressure on members not to export urea and phosphate. I think we will have to wait and see what impact that has.

I will say, if you look at what action the global urea market has taken and we have seen a little bit of prices come off of the highs over the last week. The market doesn't believe that the restrictions to hold. So I think if there are restrictions to come into place, that's incrementally positive from where we are today. And certainly seeing from, as Mayo mentioned, from a food security standpoint, the priority is on supplying the Chinese market with the fertilizer they need. And if the informal restrictions don't work, we have seen in the past, that more formal restrictions are put into place to take that action which would also be positive.

Operator: Your next question comes from the line of John Roberts with UBS.

Lucas Beaumont: Good morning. This is Lucas Beaumont, on for John. I just want to get back to retail, if we can. So your sort of EBITDA per location there is now sort of 15% above the 2023 targets on a year-to-date basis.

And it looks like you are probably going to exceed the target there for the full year to spot the first half. So is that telling us that U. S. retail locations are temporarily overrunning in the current environment and we should expect that to kind of trend back towards sort of your 1.1 million target? Or do you need to think about sort of raising the targets there or any other factors we should consider? Thanks.

Mayo Schmidt: Well, just before I call in Jeff, let me just comment that the retail performance certainly delivered record results in the first half with that double digit growth in both revenue and margins.

And of course, you would know, we are supplying over 500,000 farmers year round. We are certainly pleased with the progress we have made in this area. We are going to be focused on driving value from, if you think about the proprietary where we have over 2,000 proprietary seeds and that's supported by digital tools and services. So I think we are going to see real strong momentum in that area. Jeff or then followed, maybe, by David, if you wish, would you like to fill in more of a local view, please?

Jeff Tarsi: Yes.

Sure. And look, we don't get too many opportunities to go backwards. We are really pleased with our performance this year in the marketplace. I think what you are seeing is, you are seeing us really hit our stride in leveraging our platform in retail. And too many times, we think about just crop protection, seed and fertilizer, but when I look at our retail platform, those are the center pieces.

But what I look at what we have invested in and what we flanked ourselves with, whether it's Nutrient Financial whether it's our digital technology, it's our best-in-class proprietary business, it's the job that David and his group do with supply chain and logistics, I think we are hitting our strides across all of those areas and we are really able to leverage off of that. We have had a really strong year with our proprietary products group, as Mayo has mentioned several times today. And if I look at our growth this year, 84% of that growth has come across what we call our differentiated or focused products. And again, we look back to the investments we have made in the plant nutrition business and companies like Active Growth and Agrison, those products have really given us a really great solution offering to our customers. It's given them a great opportunity for return on investment.

And our agronomists are out really pushing those solutions hard with our customers. From an operational excellence standpoint, I don't think that every ends. It doesn't matter where you are in the cycle. Only that we continue to scrub our business, we continue to look at opportunities to rationalize that business. I think we basically rationalized 70 retail branches in North America over the last three years, a lot of our greenfield efforts that we put together out there to to-date are around making our business more efficient going forward.

So I think we have got a lot of things we are hitting on. There is no doubt we had some tailwinds coming into this year. But we think a lot of the gains that we have made this year are sustainable and we are going to work that as hard and as diligent as we can going forward. David, I don't know if you have got any additional comments.

David Elser: Yes.

Jeff, I mean, I think you nailed it well. The only two things I can add to your commentary is, to your point of proprietary products performing outstanding particularly in our nutritional space, Growers willing to spend on products that have a high return on investment. Nutritional business trending well. And I would say lastly, in the context of our strategic suppliers and the relationships, we have built there both in terms of new products they are launching, how we are looking to put together a full end-to-end solutions, as Jeff has talked about, relative of Nutien Financial, our digital assets and then obviously our agronomic economic capabilities on the farm. So owning that grower relationship through our local agronomist has been key too.

So, Jeff, that's what I would add.

Operator: Your next question comes from the line of Andrew Wong with RBC Capital Markets.

Andrew Wong: Hi. Good morning. Just a quick on for me.

We have heard a lot of talk recently about inflationary pressures on all commodity producers. Has Nutrien seen anything like that yet? And in terms of ramping up the potash production at Saskatchewan, were there any issues with hiring people back? Any labor shortage issues or pricing issues or anything like that? Thanks.

Mayo Schmidt: Thanks for that, Andrew. I am going to pull in Pedro here and he may wish to make a comment first.

Pedro Farah: Yes.

Andrew, thanks for the question. Yes, we have seen some inflationary pressures across as we kind of scaled our production. Although I would say that as we also kind of ramp up our volumes that has been an offset on volume against those inflationary pressures. So I think in balance, we do not feel like disadvantaged at this point in time in the cycle. But perhaps, I think most of those will be felt by potash.

So maybe I will ask if Ken would like to add any comments there?

Ken Seitz: Yes. Thanks Pedro. And Andrew, maybe just with respect to human resources, obviously we don't keep additional people standing around to produce a million tonnes of potash. So we have been hiring that we are finding success in that. So we have been able to get the human resources, the individuals we need to ramp up productions.

Our confidence level there is quite high.

Operator: Your next question comes from the line of Steven Hansen with Raymond James.

Steven Hansen: Yes. Good morning everyone. I can appreciate the prior commentary on your potash surge capability and recent decisions to add a million tonnes of production.

But I am just curious on whether you contemplate on adding another 500,000 or perhaps some more in the near term as opposed to waiting, just given the price levels we are already at. It just strikes me that high prices can create longer term problems. And so just trying to understand what the decision vector might be in terms of adding new production sooner versus waiting into next year? Any limitations maybe just on the operational side of that as well?

Ken Seitz: Yes. Thank you Steven. Ken Seitz here again.

So yes, we did have a look at the opportunity in the market and frankly what our customers are asking for. And that led to the conclusion that a million tonnes of extra production was appropriate. We have long talked about 18 million tonnes worth of capability. On an annualized basis, this year alone will demonstrate 17 million tonnes of that. So we have the capability and certainly with enough lead time we can get there.

Again for 2021, we thought that what our customers are asking for led to that million tonnes for next year. Could we surge additional production if the opportunity is there and if people are asking for it, we could.

Operator: Your next question comes from the line of Michael Tupholme with TD Securities.

Michael Tupholme: Thanks. Another question on the planned increase to potash production in the second half.

I guess first off, can you talk about which mine do you expect that incremental production to come from? Is that all expected to come from Vanscoy or are there other mines in the mix? And then secondly, how do you expect potash cost and production in the second half of the year to evolve as a result of that increased production and potential shift in the mine mix?

Ken Seitz: Good. Thank you Michael. It's Ken Seitz here again. So yes, you are correct that Vanscoy is playing an integral role in that additional million tonnes. But we are also getting additional tonnes from Cory and Lanigan.

And so the work that we do is one that says, what is the market calling for? What can we produce? And what's our most low cost efficient path to production? And that combination of Vanscoy, Cory and Lanigan was the answer. With respect to our own cost, if I look at the full year there, there's an opportunity for us here with additional volumes to bring our cash costs down. That said, there is an offset this year with the strengthening Canadian Dollars, given that we report our cash cost of production in U. S. Dollars.

On a Canadian Dollar basis, I can tell you that production levels, our post production costs will be at really competitive levels, first quartile for sure and probably similar to last year.

Operator: Your next question comes from the line of Michael Piken with Cleveland Research.

Michael Piken: Yes. Good morning. A couple of questions on the nitrogen business.

Number one, I saw you narrowed kind of the range of your guide some. What type of volume capacity could we be looking at in 2022? And what does your turnaround schedule look like for the rest of the year in nitrogen? And then into next year as well?

Mayo Schmidt: Michael, thanks for that. I am going to ask Raef to comment. They have had a great year and I know he's keen to participate here. So Raef, over to you.

Raef Sully: Yes. Michael, thanks for the question. I appreciate it. So look, as far as volumes go, we have had a few larger than normal turnarounds this year. We have finished the one at Borger.

It was the largest one we have ever done there. And we are a third of the way through at Redwater. Again, the largest one we have ever done there. This is because both sites are close to fifty years old and we have got to take care of some major items. That said, going into next year we should see volumes up over 11, probably closer to 11.3, 11.5.

But we have also got some of the brownfield expansion projects coming in. We have finished the one Borger. So that will help us out as well. And of course, we are trying to continue in addition to the brownfield expansions from the turnaround schedule, we are going to continue that work on increasing reliability of the sites. Just a point to note, when we talk about our liability numbers, they include the planned outages that we have to take.

And if you think about a normal ammonia plant, you have got to allow about 3% for planned outages on an average basis. So the maximum that you could see us reporting at some point, it's about 97%. And you will see that we are over time trying to get towards 95%, 96%, which you make us best-in-class.

Operator: Your next question comes from the line of Duffy Fischer with Barclays.

Duffy Fischer: Good morning.

A couple more around nitrogen, maybe a three parter. So one, on the UAN anti-dumping, what's your view on the validity of that claim? Two, if it is favorable for the U. S. producers, what impact would that have either your wholesale business or retail kind of in the intermediate term? And then three, if it is favorable, would that open up any opportunities for you to invest in a different footprint around nitrogen?

Raef Sully: Well, look a good question. I am not really sure I can comment in on it.

I will tell you that we are answering questions that come from the Trade Commission. As we did with Mosaic owing duties case, we are not actively participating in this one. We are just answering the questions that come through. We are taking a neutral stance on it, okay?

Operator: Your next question comes from the line of Rikin Patel with Exane BNP.

Rikin Patel: Hi all.

Thanks taking my question. Just one for me, on retail. You are able to hit the 10.5% margin year-to-date. And that's in line, I guess, with the lower end of your target for 2023. Just curious if you could update us on, I guess what the roadmap map is to hitting that target on an annualized basis? And whether given you are hitting the 10.5% now, whether we should be a little bit more aggressive in we are assuming you guys can do that? Thanks.

Pedro Farah: Yes. This is Pedro. I think we are very pleased obviously with the progress to-date and what we have to achieve. And even though we to look at this through the cycle, we are planning to update all of our targets as we go into next year. And we probably have on our Investor Day, we will be refreshing all of those targets.

So that's right. The progress that we have made today in retail and other parts of the business have accelerated. So we are pleased about that. But we will need to reset them now for the future.

Operator: And your next question comes from the line of Adrien Tamagno with Berenberg.

Adrien Tamagno: Hello. Good morning. Thank you for taking my question. With regards to the Brazilian deal, can you just explain the rationale? And where it will bring you in terms of market share locally? And if it was related, there was actually very little buybacks during the quarter? Thank you.

Mayo Schmidt: Thanks Adrian.

And I am going to ask, bring in Mark Thompson here, Head of our Business Development Group and Sustainability. Thanks Mark.

Mark Thompson: Yes. Thanks, Adrian, for the question. Good morning.

So I think your question was pertaining to the recent announcement of the acquisition that we signed in Brazil. That was Terra Nova. And so, as Mayo said in his commentary, we continue to build out our focus on constructing a comprehensive retail model in Brazil, similar to what we have in the U. S. and across North America and around the world.

We have made very good progress. And as Mayo said, have now announced four acquisitions in the last 18 months that are helping contribute to our footprint there. With respect to Terra Nova specifically, it's a nine branch business operation, very attractive footprint in the region of Minas Gerais. We also do have a presence already in this region. And so this will continue to strengthen our footprint.

Whereas in the U. S., we have a very strong market share, 20%-plus which gives us strong competitive advantages. We are in the very early stages of our potential opportunity in Brazil. And so while this does give us a good foothold in market, there's a lot of room for us to continue to expand our model in the country, both with retail location acquisitions but also, as Jeff described earlier, bringing our integrated model that involves proprietary products and full-acre solutions to look forward. So we are optimistic about the opportunity and continuing to look for value enhancing acquisition opportunities in Brazil.

Operator: Thank you. This does conclude the Q&A portion. I will now turn the call back over to Richard Downey for closing remarks.

Richard Downey: Thanks everyone. Thank you for joining us this morning.

And if there's any follow-up questions, Investor Relations is always available to help you out. Have a good day. Thanks for joining us.

Operator: Thank you. This does conclude today's conference call.

You may now disconnect.