But Bill can provide a little more detail.
Bill Krueger: Thanks, Pat. Yeah, as Pat just mentioned, the start to 2024 has actually been better than the start to 2023 was. And looking at kind of the 2024 calendar year, we will see increased production. We’ve had a couple plants come back online. But at the same time, we’re likely going to see an increase in the blend rate every year, it continues to increase, I think, with the exception of one year. So we’re expecting that trend to continue. We will see increased exports. With January off to a slow start, we’re still confident that Canada specifically will continue to grow. And with ethanol being in such a steep discount to RBOB, countries that want to increase their blend rate are more than likely going to come to the US with us being at such a discount to Brazil.
So from our perspective, the balance sheet for ethanol really looks the same at the end of 2024 as it does — or as it did at the end of ’23. So I don’t know that the forecast is that pessimistic. We just were able to see a lot of real strong opportunities throughout 2023 that we’re not certainly going to repeat.
Brian Wright: Okay. No, that’s very helpful. I guess kind of a follow-up on that. Given the COT short position of managing money in corn and soybean futures, just can you talk to a little bit of like when those positions cover and historically, like how significant that can be and how the duration of those covering kind of rallies can be?
Pat Bowe: You make a very good point its just that I don’t know off the record but we have very, very large short position spectrum short positions in the futures markets these days and they’ve been right they’ve made some good money in those positions. And when those are reversed, you’ll see a bounce. And that the timing of that and I think a lot of it in the fundamentals of the ag cycle be when we get farmers in the field ready to plant, that one day the farmers make decisions on sowing some corn. They haven’t sold a lot of early this year. So we expect to see as farmers, get ready for the next crop cycle to probably sell some of that and they would likely to sell on some kind of a rally. So if we get a short covering rally that would be well received by the farm community obviously.
But these — prices are lower off the last two year peaks, but these are not horrible prices, right? There is still at breakeven kind of numbers and corn given the current input costs. So, this isn’t a disaster year, it’s just a lower than we’re off the peak, the last couple of years.
Brian Wright: And Bill on the trade side you’re seeing some other fundamentals there.
Bill Krueger: No I think Brian the short answer is, any substantial rally with managed money coming out of their positions I think will be offset with farmer hedging, our farmer selling which will mean commercial hedging
Brian Wright: Makes sense. And then I guess, lastly if I could, can you talk maybe about the pet food impact on the business in the quarter? Is that to a level that we can talk a little bit about from a quantitative point
Pat Bowe: I’ll take that Brian. Yes, our pet food industry or our pet food business has continued to perform well much like several industries. Some of the premium products are being replaced with lower cost products, due to the inflation and the consumers. But one interesting opportunity as Brian mentioned is, two of our acquisitions — recent acquisitions between Bridge Agri and ACJ International, both are really focused on the pet food industry and that’s brought a welcome increase in our volume. It’s also brought opportunities to our existing pet food industry. That’s allowed us to take advantage of the synergies that we expected out of those businesses. So, in terms of continued growth and focus on the business, it is one of the key areas in our Premium Group and premium ingredients sectors that we are focused and honestly looking at more growth opportunities.
Brian Valentine: And Brian just to add a little more context even on a Bridge and ACJ. I think we previously when we announced those had commented that we thought they the combination of the two would add incremental EBITDA of about $5 million to $10 million a year. I would say, we’re on track to meet or actually probably trend a little bit higher than that.
Brian Wright: Great. Thank you so much.
Operator: Thank you. And this concludes your question and answer session. I’d like to turn the conference back over to Mr. Hoelter for any closing remarks.
Mike Hoelter: Thanks, Rocco. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Wednesday May 8 2024 at 11 a.m. Eastern time when we will review our first quarter results. As always, thank you for your interest in The Andersons and we look forward to speaking with you again soon.
Operator: Thank you. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.
