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Welcome to the third quarter earnings call. The first nine months of the 2025, 2026 period at BrasilAgro. Thank you for waiting. We started a little bit late today, and we have André and Gustavo to present our earnings. If you're in English, this presentation is also available on the chat. Before we begin the call, I want to start off by saying, first of all, that BrasilAgro is completing a anniversary. We're completing 20 years of history, and we're really happy with this milestone. No one imagined 20 years ago that a PowerPoint would become such a big company that's so significant in this sector and industry. You'll also see we have a new visual identity to celebrate this anniversary, and we're really happy to share our anniversary. Now I'm going to pass the floor on to André to start the call.

Hi, can you hear me now? Great. Sorry about that. We had some technical issues here. Ana, thank you for the introduction. Thank you all for being with us 20 years, as mentioned by Ana Paula, of a lot of resilience and a lot of lessons learned. A lot of achievements and mistakes, of course, but that's what makes a company mature and really have results. No doubt, the points right were a lot greater than the wrong points. That really helps us to become a better company. That we also enabled the growth of many people and the development of many regions. When we look behind, and this is a reason of a lot of happiness for us.

How many people were able to achieve support for their families, how many regions were transformed, and thousands of kilometers of roads and electrical networks were implemented. Now these 20 years, we're going to get into a little bit of what this history of 20 years is all about and how we built this. We definitely did this with people's work and your trust. There's no work without trust and there's also not only trust, right? The combination of trust in the company's investors and analysts in these 20 years and the work on our behalf really made us reach the point we're in and work in this direction, right? That's what makes everyone really happy as they are part of this company today.

We're gonna talk about our results, and it's a really complex year due to the interest rate and other factors. Let's look at what we have under our own control, which is technology, plantations, productivity. We know our agribusiness has its cyclical nature, and today we're experiencing a low cycle moment. We're gonna talk about this and the good things and the bad things, and that's why we're really gonna be available to respond to this, right? Let's talk about the numbers for the first nine months, BRL 637 million of net revenue. It's really important to when we look at the first nine months last year, there were sales that were also accounted for, and we have an adjusted EBITDA of 42.8 and an interest rate.

With all of this, we reached those nine months with BRL 76 million of net losses. This is really influenced by the financial expenses and sugarcane in the second half of last year. Thankfully, sugarcane is doing really well this year, but we've had very positive perspectives here, and we actually were able to close some harvests that we'll be able to demonstrate here when it comes to soy. On the next slide, please. Here we can see once again the resilience of the company to continue to sell land. In Paraguay, it's a small sale, but it's really important to demonstrate that we have liquidity and that it is a project that in the last few years suffered a lot with climate issues. This year it's doing really well.

When you have a good productive year, you attract liquidity, right? We were able to accompany a sale in Paraguay, not very big, but very significant when it comes to internal return rates. We're talking about 23% in BRL, within our historical averages and 14% of the internal return rate in dollars, right? No doubt Paraguay, this year we have very positive production, and we'll have a lot of success from a productive and real estate perspective as well. Next, please. Here's a little bit of the scenario, and here's what we asked to share here, which is this line over here. At the end of each one where we had the beginning of the war in Iran.

What we see is, soy is kind of moving sideways ever since the conflict began. Corn as well is really connected to this. The only commodity where there was a significant recovery after this was cotton. We know why. Because of the connection that cotton has, and the synthetic fibers have, which, oil sub-products really made cotton pull this, the prices. We have cattle raising following a very positive cycle. We have a restricted off supply in Australia and in the U.S. and in Brazil, with an increase of the rate due to the BBB. We have more meat, more food, to The cows just still take nine months for pregnancy, right? This is gonna take a while.

Ethanol was another commodity we expected would react positively as occurred in cotton due to the umbilical cord kind of connection and the price of gasoline. We see the quality of the imports that is not really preserved. We saw petroleum go from BRL 65 and reach BRL 130 or BRL 90. We haven't seen a recovery in the price of gasoline. We do expect this to happen in the end of the second half if the conflict really perpetuates all the way there. The sugarcane has been following a short historical series. However, we're gonna talk about the climate, we're gonna talk about perspective.

We're gonna see the El Niño coming along really strongly, and that really increases the intensity of the discussion on sugar production in India and Thailand. We're not optimistic the prices are gonna get back to BRL 0.18, but we think that the bottom of the well is kind of locked in there. There should be an upside for gasoline and for the production of sugarcane as well. Whenever you have a geopolitical conflict or discussion, you have the cost matrix and the revenue matrix. Unfortunately 'til now, the only thing that was really impacted was the cost matrix. As we've shown you in the commodities, it's the only cotton was where we had an alteration in the matrix just one minute. Here, just one second. All right. Can you see? Yes. Good.

Thankfully, we're not IT specialists, so we don't work with this, right? We're just the farmers and the agronomists. Anyways, as I was saying, we have this cost situation that was impacted by the war, especially for phosphate fertilizers. They went from prices at $600 reaching almost $800. Chloride as well went up a lot, and urea also. Those inputs that are really connected to natural gas went up a lot. Potassium chloride, we had already basically bought about 70% at the beginning of the harvest. With fertilizers, we already had a pretty big position. When you look at the 43, that represents the first harvest, right? Sorry, represents the total amount of fertilizers, not only the first harvest.

In the first harvest, the fertilizers we're gonna have, that we're gonna need in the month of September, October, November, we have a much greater percentage closed. Because we estimate and expect that the conflict should be cooling down a bit in the next month. In the first harvest, we already have most of it, the phosphate inputs are bought. When you look at the off-season harvest, plantation of sugarcane in the first half of next year, those phosphate subproducts are not purchased. We also see a exchange ratio that's kind of skyrocketing. The conflict generated only an increment in the cost matrix, but it still has not led to an increment in the revenue matrix, right?

If the conflict finishes today, no doubt we will have a significant impact in the costs, and we won't necessarily have a revenue benefit. We must all hope that this cools down as quick as possible. Here about the planted area. The harvest is 25. We closed at 168,000 acres. It's important to highlight here that the company in the last few years has been a seller. Basically we've been able to continue to keep a significant production area. For soy, we're basically keeping about 94% harvested. We lack a very little, and what's missing is Paraguay especially. All the rest has already been harvested, and Paraguay is doing really well.

This year we have Paraguay bringing in positive surprises, we've already started to harvest. We're starting the beginning of the harvest for corn in summer. Generally, Central Brazil has a rain distribution that's really positive. For sugarcane, we already started harvesting in two units, especially in the Serra Branca and Alto Taquari. We started off with the first harvest with a lot of adherence. It's an El Niño year. A bit of what I started saying is the biggest concern we have is that the northeast region tends to suffer a bit more. It's a year with a lot of caution when it comes to the next harvest, right?

The harvest that's gonna be planted around October, November, where we have to critically look at this and be careful when it comes to how we're gonna allocate capital and especially when we start seeing the risks are very low. We've been working on this carefully in the company to really exclude some areas that historically lead to some production issues, right? Because we're seeing a significant El Niño year up ahead. Great. Now just a bit about the hedge position in the company, and we're sharing, basically there's a harvest that the soy we already mentioned we harvested. It's a year of a lot of volatility, but I think the company was able to position itself positively, and we'll see the numbers now, right?

It's worth mentioning that when we were sort of defining the budget last year, we were talking about soy at about BRL 10.60, BRL 10.70, and we had a currency rate at about BRL 6. That was the company's budget. Ever since we have been locking in some operations. We had a currency rate that was almost at about BRL 4.90. What is important to consider here is basically what we have as a hedge locked in. We have a currency that's at 65% lock, locked in at about BRL 5.90 almost, BRL 5.89. That's what we have locked in as. As a currency, Chicago's at BRL 10.85. Of course, what we need to lock in still is being locked in at about $12.

That's gonna lead to a really interesting combination because even with the currency dropping, we should be able to have an average currency of about BRL 5.65, BRL 5.70. The Chicago will also be able to recover, right? Cotton is a crop where the currency is a lot better actually due to a area reduction when we saw a major concern with the cost of capital this year, with a crop that we can't put capital at risk. We had already performed some sales back then, and we have about 60% of the cotton sold at a type of currency that's about BRL 6.65 per dollar. We've also seen about 76% of the commodity sold. For ethanol, we've been working on volume.

Ethanol we've already, we see corn is about 54% sold and farm receivables, which is also very significant. The company has over BRL 600 million in this line here in the company. It's a super significant account and we're working on it in the P&L. There's a currency that's really adherent to the harvest, which is BRL 586, and the Chicago about BRL 1,079. Next, please. Gustavo now, that was the intro, but we can get into the numbers now. I'm just gonna close my camera real fast here and pass on the mic.

Thank you, André. Wow, thank you all for your presence and doing this presentation of the results. This exercise starts off in the beginning of July, and then it goes up until July 30th. We consider about BRL 76 million within the highlights. Last year, in the same period, we had presented a positive result of BRL 76 million with total revenue about 27%. I want to remind you that we already had mentioned on the December 31st with the impact that impacted the revenue and the results. We also saw that we also had a sale in the farm performed previously and this year. We at the moment just accounted for this transaction, the one that I was mentioning in the beginning of our presentation. The adjusted EBITDA in this period was BRL 42 million, BRL 42.8 million. Prior to this was BRL 195 million.

On the graph we presented this, with the main movement in these two periods that we have, one part that's on the right side here at the center, with the soy and corn. It's important to highlight also that everything we have here, up until the March 31st was, basically stocks and collections that were performed in 2025 with everything that would be like the new harvest. As I mentioned, the 240,000 tons of soy. Only sold about, 55,000 tons in this quarter. The decision of carrying on this a little more up ahead, due to the fact that in the beginning of the war, we had this expectation, of a short-term solution that we saw rates, started to pressure a bit.

Considering the excellent harvest that goes in as well, as well as due to this increment and this increase, we have at the logistics level. We decided to hold this a bit more and see if we could find opportunities that were better for logistics, because the products are already practically all sold, about 60% compromised already. We're just searching for the best moment, right, for all of this. Until the March 31st, we had already sold only the stocks, and then we had BRL 11 million sold in soy and BRL 22 million in corn.

Then sugarcane with a difference, BRL 56 million that we had presented on the December 31st when we talked about the ice period and the frost we had in the region of São Paulo, and issues also with burns in the northern region. Cotton had, we had a harvest in some areas with losses, and that led to reducing the amount of hectares that were planted during this new harvest and the farm and sold of the other administrative and costs and then especially when you can see this in sugarcane and the farm, and that explains the main differences between the ex-adjusted EBITDA, right?

When we see the results of this exercise in the top part on the graph are you can do ±BRL 76 million. You see the price of sugarcane and cotton that represented a variation of about -BRL 36 million. The lower volume of sugarcane as well, which added to this BRL 19 million. There was a reduction in the cost as well, with some soy, corn crops that we should have some kind of a saving because of the productivity in the past. We can see the fair value, when you can see the performance of everything we've been marking to market at fair value.

The impact of the prices as well presented for ethanol and sugar, that really impacted this, generating an impact with a lower result and this sale of farms and also an impact that was positive for this period of BRL 37 million of financial results, which we can only see at the bottom part, last year during these nine months, 2025 with BRL 93 million and this year. This impact represents BRL 56 million. I always wanna remind you that the first line of financial investments, we have the minimum cash. We see our interest on liabilities as well, which is the cost of debt that the company has. We see approximately BRL 55 million.

In the last year, this effect of 15-59 was smaller because of a lower interest rate at a percentage level. After we saw that for these nine months, especially for mark-to-markets, which are the updates to fair value and the other variations as well are practically at a null effect. To complete this, we are presenting the BRL 76 million that are negative. You can see this performance that we've had in sugarcane as well. Here you can see the gross results once again. Mentioning that everything that was commercialized here, with the exception of soy, which is 55,000 tons. All the rest are the sale of stock of the prior harvest.

Soy, as you can see, there's an improvement in the gross earnings and results as a consequence of better cost per ton. For corn as well, we also see the price and cost leveraging the results of the products. Looking at the unit results, considering BRL per ton, that would be the potential. With the increase in volume, not only for the soy but also corn, we had an increment in the volume. When we look at sugarcane, which is to the right side on the last here to the right, you can see how this performance was of 1,341,000 tons for 2025. For 2025/2026, we have 971,000 tons. That really brought in this difference that's so significant, about BRL 36 million.

We also see the unit price, not only because of the price of the ATR, but also considering the concentration of the kilogram of sugar that we considered in the provision. That led to our margins, which are normally stabilized, 3,000, 3,500 hectares, which keep a lower margin as a consequence of this impact on productivity. When you see cotton as well, we had, as we mentioned, part of this cotton we performed sales and commercialization, which are produced in irrigation areas that were very positive. We had other areas that did not have irrigation that we had very negative impacts.

Besides having productivity that's very low, we also had an issue with quality, which made the unit price be a lot lower than what we normally had achieved through a hedge that had led to these results with BRL 9.9 million. The discount made the price be a lot lower, right? This was the main engine, let's say, that made us decide to reduce the service for this harvest that we're working with now. We can also see the net debt for the company, a total of BRL 1 billion and the cash level of BRL 887 million. This debt is at 93.2% CDI with the maturities considering those periods.

We have the receivables at the farm, BRL 768 million that we still have to receive. Here, what's important to mention is we are at a moment where all costs were already incurred. From now on, we're going to be commercializing and transporting and receiving all of the receivables for production. Here, when we consider soy, for example, we have to receive over BRL 280 million. As we had mentioned in the beginning of this exercise, from now on, we'll begin reducing the level of leverage, especially considering the understanding that the reduction of interest would happen throughout this year and the next year.

After the beginning of the war and as you saw, the central bank was reducing their pace, we will make a decision to search for a reduction in our level of investments and try to be more efficient as well in how we place in the production. We are at this moment confirming the El Niño for the climate conditions in the next harvest. I think with that, we wrap up our presentation and now we'll get into Q&A.

Thank you, André. Thank you, Gustavo.

Well, I just wanted to get back to one discussion on the cost of fertilizers that André had already mentioned in the beginning of the conversation. This has been a central point here for discussion, and I think it's worth reinforcing, right? It could compensate this and maybe amortize a headwind and maybe bring in an inflation year-over-year that could be lower than what the market feared, right?

I wanted to understand what are the assumptions behind this and what are the prices of product, inputs, nitrogen related inputs that you could maybe be more inclined to accelerate purchases for and what would be the timing for this since you have the logistics and the flow required to reach the farms. I would imagine this is probably smaller for smaller farmers, but I would imagine that would maybe consider the stabilized level that would already encourage this kind of movement, right?

To bring in this discussion on the cancellation there of the farm that we saw last month with the worst scenario from the counterparty. How are you considering the risk for the receivable portfolio? Are there any other possibilities of cancellations that are concerning you? Just if you could give us a little more visibility on this, it would be interesting for the market. Thank you.

Okay, Bruno, how are you doing? Well, for fertilizers, you know, it's an area I love and I've been working in this sector. I worked in this sector for 12 years, but I wanna share a little bit of the expectations here. What are we working on from a timeline perspective? The sugarcane harvest started off in April in some areas, and it's gonna go until the month of November. There's a period in sugarcane where you're harvesting it, especially the sugarcane we're harvesting in these months, where you still have humidity in the soil, and that's still like the remaining from the rain period.

When you talk about São Paulo, you should have some humidity in the month of May or so. When you get into a region like Mato Grosso, things are a little more complicated, right? You get rain, you get back to having rain in September. The fertilizers and nitrogen based products that we have the need to work on, and we're gonna be buying considering this, and we're gonna be harvesting. We're gonna be fertilizing these sugarcane plantations, right? The discussion we've been working on that try to balance out this impact is if we should have the full dose of fertilizers. When you put in this fertilizer for the sugarcane, you have an absorption curve.

This happens in the months of January, February, and March, where you have most of the dry material accumulated. When you're fertilizing sugarcane right now, well, not fertilizing, this is bad because it won't have the availability of the nutrients it needs. It's growing about 100% as we do every year for an operational matter. You're gonna kind of fertilize about 100% in the sugarcane. Due to this significant time movement with the prices, sugarcane's gonna be harvested now that has humidity in the soil or protected through rain in the next month we're gonna treat. How are we gonna treat this? Well, it depends on this year. We would already set up like a full dose or maybe in installments, right?

When we have a full dose applied, it's normally older sugarcane where you don't want to have such a small installment or part, right. In the younger sugarcane, we're going to drill this down to try to bring this a little bit before the sugar season. Sorry, before the rain season for the sugarcane. The sugarcane we treat and harvest. The sugarcane you're harvesting now, you should treat. What are you going to harvest in August or the end of July and December? That fertilizer you put in the soil is just to help you operationally because the sugarcane will not absorb that. They are only going to absorb the fertilizer or any crop. It only absorbs this when you have water. You are going to fertilize sugarcane in August. You have no rain, no humidity.

The fertilizer is gonna be stabilized on the surface, and it won't absorb it. We would do this every year when we had another stable price situation, right? When you have price volatility, then you drill this up ahead of it. When you look at the timeline of the sugarcane, that's gonna be it. As I mentioned, phosphate products we already have good positioning for. It's important to see this impact when you get into the discussion on the conflict. The biggest damage is for the nitrogen based products, right? 35% of this goes through the Strait, right? The Hormuz Strait. When you look at phosphate related products, then you could have an increase in the cost matrix, right? With natural gas prices going up, et cetera.

It's less than 15% of the phosphated fertilizer that goes through the Strait or formulas. Yes, we're gonna have a cost issue considering the increment of the cost of natural gas, which is the basis of everything. For fertilizers, I try to answer this a bit, and I can add on as well a bit. What we are looking at here is that last year for a hectare of soy, we were talking about BRL 4,100 of direct cost, right, per hectare. All of this confirmation of cost was considering a dollar of almost BRL 6. What has happened during this period, we're in this process starting up a new budget.

We see that the appreciation of the dollar has really pulled the cost downwards, especially for defensives. Since we've already purchased part of the chloride, almost 70% and everything, with the phosphated products and everything for soy and corn, although we have some prices pushed upwards, let's say, in any of these cases such as the urea for the off-season harvest, we can see that this impact and appreciation of the Real has made costs be very, very similar from one year to another. The big challenge here when we see this in Reais and sacks per hectare with the costs here that are normally 30, 35, historically, we see that it's kind of at the ceiling, the 35.

The big challenge up ahead is how we are going to position ourselves, right? At a moment where we bought the chloride, we already sold a bit of soy and that would give us a sack of soy approximately with like 4% or 5% better than the previous year, right? When we saw this through the margins, it was actually a little bit better. Of course, from now on, we have to see what's gonna happen and if this will impact the services especially. When we consider the first version of the budget we had seen before, between March and April, just as presented here and, in fact, the prices for the fertilizers and were kind of stabilizing there.

From then on, we saw a possibility to begin the negotiation, right? When you have scale to buy, you can have some sort of discount, right? Also the doses, we're talking about 130, 140, 150 per hectare. When you see the impact of all of this, of the price and the fertilizers, there's not much of an incidence, right? That's the vision we have, we can see this impact in the fertilizers. Great. Also to answer Bruno, the second part of the question here on financial risk. I think that we were very quick in solving this. We would be able to sell this, right? I like looking at the half full cup, right? We were buying an area. Yes, this transaction, we had a reduction.

This asset will get back to our shareholder base and for our asset base. It is within our base, and we're gonna be searching for ways to do good business with it, right? We're not gonna get into details here, but I'd say that this asset that came back was one of the assets we had of a buyer. I don't think we had a detailed credit analysis, but it's a buyer that has a leverage rate that's a lot higher than the others in our portfolio. Generally, our portfolio, we always sell farmers to farms to farmers that already have a big portfolio.

This farmer that we canceled this business, they didn't have such a big portfolio, and so their liquidity capacity was smaller, but that's not what happens in our portfolio with our other creditors. We're really keeping our eyes open to this. It's always worth mentioning that the transactions we have protect the risk for this to happen. That's something we just demonstrated, right. If you have a huge challenge and you can see our horizon here where there's no possibility of timeframe. In this sense, we have an asset registered in the company, and it's a lot easier for us to, it's a sale where you can sell this asset.

This is what we consider you deliver the title, but you deliver the property but not the title. That's where we can guarantee the solvency of our transaction. As a creditor, where we already had a relationship of leased properties, that was one of the worst in our portfolio. I'd say that our portfolio, we're very confident about the receivables as well.

That's great. Thank you very much. Very complete answer. Thank you, guys.

Thank you, Bruno. Now we're gonna open up Thiago Duarte's mic from BTG Pactual.

Hi. Good day, André, Gustavo, Ana. A pleasure to speak with you always. As always, I wanted to take advantage of this topic on the fertilizers and also hear a little bit of your guys' opinion as well as André's, about a more market-based issue. This graph on the exchange, that you present in the presentation, from two years from now, basically, if we were to extend this decades later. That would be maybe not as favorable for commodity. We had the war on Ukraine and then in 2027, 2028. My question here to you, Andrés, how you understand that this ratio will get back to the historical average? Do you understand that it will be a retraction in the demand for fertilizers and a bit of what you guys chose as how you're gonna work with them eventually, and maybe bring this downwards?

Will it be for the recovery of prices and commodities, as you've already presented is happening. The truth is that this happened very little when you look at the grain specifically. My question to you is, first, do you understand that this should get back to the average? Or do you think the sector will have to handle these very unfavorable exchange ratios for a while? That would be my question to you. Thank you.

Thiago always has the intelligent and difficult questions here. He wants to take advantage of my past experience in the industry for fertilizers. Just to understand here, what I'm gonna explain a bit about production, just so we can understand how this will accommodate this. Nitrogen fertilizer industry is one of the most beautiful things. The air we're breathing here has more nitrogen than oxygen. What the fertilizer industry is all about is they need energy, and that's why you have the natural gas story. We capture nitrogen from the atmosphere. Through this process that is external, adding energy into the molecules so they can shock. We produce gas, which is called ammonia, NH3. This gas is where you start all of the production of the fertilizer industry.

When you look at the ammonia and you NH3 and you react with SO4, this is sulfate. When you react to NH3, you have just ammonia nitrate. When you get ammonia and you react again to another molecule, you have CO2 and NH2, which is the molecule of urea. That's really important to understand, right? To understand the fertilizer production. You need to have this fundamental element, which is natural gas. This natural gas is going to be where everything starts. What's the with phosphate?

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[Non-English content] A time where the rain will take longer, it shall give us more favorable time for the fertilization of nitrogen for sugarcane. We are working on this for next year.

[Non-English content] Okay, to complement the costs that were mentioned, all of this previous budget that we inaugurated has a cost for all of the crops very similar to what we had last year. [Non-English content] Because of the appreciation of the Real, defensives are cheaper. [Non-English content] Fertilizers are costing BRL 180. Now it's BRL 80 with more chloride.

[Non-English content] Some changes because of that. The concern that we have for the future is the CCT. The CCT may have some kind of impact, some material impact, if we maintain the diesel price over BRL 160. This is the only crop that we are more concerned with. There are still a lot of things that can happen. We still have contracts with service providers to make, and it will be the beginning of a harvest where we need to be very attentive and be able to control the costs that are still going to close.

Thank you for those answers. Thank you everyone for your questions and for your time with us this morning. We will be closing this call, so if anyone has any questions, please contact us through our investor relations team and see you next quarter.

Good morning, everyone! [Foreign Language] Estamos aqui mais uma vez no call de divulgação de resultados da BrasilAgro. Hoje nós vamos estar apresentando os resultados do segundo trimestre do ano safra 2025-2026. Para quem nos acompanha em inglês, a apresentação está disponível no chat. Agora eu vou passar a palavra pro André Guillaumon, nosso CEO, para dar início.

[Foreign Language] Muito obrigado, Ana Paula.

Thank you so much, Ana Paula.

[Foreign Language] Obrigado a todos.

Thank you, everyone.

[Foreign Language] É, mais uma vez, é um prazer enorme estar aqui com vocês, e acho que esse call tem sido desrepetitivo, tá? Esse call nós estamos fazendo diretamente de uma fazenda, então conciliamos as agendas aí. É, eu estou hoje na Chaparral. Tomara que a internet não tenha nenhum problema de conectividade. Hoje tá todo mundo aqui cruzando, vamos ver se o provedor é bom, mas vai funcionar bem. A fazenda aqui já tá conectada com telemetria, esperamos, né, que atenda bem a internet aqui, vai ser um desafio. E se isso funcionar, acho que eu vou fazer todos, viu, Ana Paula, Gustavo, que aí eu não fico em São Paulo por causa das diretrizes das operações, tá? Bom, mais uma vez, obrigado a todos vocês de estarem conosco, a gente vai divulgar o número do semestre.

Antes de hablar un poquito del semestre, sé que hoy no pusimos aquellas diapositivas allá al frente de clima, pero voy a hacer un comentario rápido.

Conditions, but I'm going to give a quick overview. I believe that overall you've seen this, and it was a year with a bit more of irregular rain conditions, but our replanting needs were very low, and we had good efficiency in choosing when to plant the right crops, and we've been working on development ever since then. That's been very positive. In Mato Grosso, with rains that are good and not getting in the way so much as what happened in the last harvest. The harvest last year, in the last harvest was really difficult, but now, so far, we're doing really well. We have a lot of units as well, doing well in Mato Grosso and Bahia in here, and it's always a huge challenge.

The plantations are doing really well, spectacular. We have the last rain five days ago in the farm. We're expecting another rain period this week. So this is an overall panorama. Sugarcane has been recovering a lot as well. I came from the Centro West farm yesterday. I was in many different sugarcane areas there, and the sugarcane is doing really well. They're sprouting well with replantation rate. That's very good. We accelerated the plantation of sugarcane. We planted a bit more sugarcane now during summer, even to give us a bit more time as well. We're doing really well overall in all of the crops. A big challenge is, and I think it's worth mentioning, was the implementation of telemetrics in all of our operational units in the company.

We've implemented this in Paraguay, now we're just waiting on Bolivia to have the full telemetrics. All of our units in Brazil are one hundred percent covered by telemetric monitoring, and we have a lot of efficiency when we add these technologies, and we can improve systems a lot. The application of defensives are all connected as well in all of our sixteen units we operate. We're really happy with this challenge we overcome, and the team was able to deliver, and now we want to improve more and more of the accuracy and telemetrics. We also open up COR in Palmas, that's doing really well. And there, we've also been monitoring all of the operations in the company. We'll talk about the first six months in the company.

We had a revenue of $470 million reais, and adjusted EBITDA of $71.3 million, and this loss of $61.8 million, and we're going to get more details into this soon, but six months are normally really tough because you don't have the classification of some of the assets yet. You have all of the incurred expenses into the cost base, so it's a huge challenge this semester, but we're going to get into more details in a bit, and the company will also show us how they're working and what they've been doing. So one more slide, please. Well, this has been the biggest challenge for the entire agricultural sector, the supply of soy that's been a surplus in the supply. We see the stocks a lot higher than they were a few years ago.

We reached stocks that are over fifty million tons, and Brazil is once again heading to a super harvest. A few houses are talking about one hundred and seventy-nine, one hundred and eighty-two million tons. And as things are moving, that's really the reality. Soy here and in Maranhão, Pará, and Piauí, I've been going around, the soy plantations are really spectacular. A lot of the soy have been above sixty-five, seventy sacks. So this number that was an uncertainty in the market in the past two weeks, really has been demonstrating more signs of confirmation, and this has impacted prices, but also the premium perspectives. Then corn has a very regional specificity. The ethanol plants are changing all of this logistical network. It was a cereal that used to have a big significance in the logistics.

When it's a low added value product, logistics makes a huge difference, so the distribution of the ethanol plants, we'll see that we're being able to sell corn with a premium in some markets, and this has been very interesting. We've also seen when we look at our historical relationship and the process of soy and corn, which is 2.3, but it's a lot more favorable compared with the corn, and the positive ratio is a lot better for corn. So when we see cotton, it's moving sideways around $66, $67, even $68. Then cattle is a recovery that took place in the beginning of last year, with a perspective that's been very positive. This week, we've had news all over...

Trump advisors are saying they're going to pressure to lower costs of beef in the US, but the biggest issue is we had scarce supply of beef, so we're really optimistic of the prices in this sector. Then for ethanol, at the end of last harvest was very positive, went up significantly, and that helped offset the bottom graph, which was sugar, sugarcane. We left those prices that were those high prices, $0.22, $0.23. We started the harvest with $0.17, and we wrapped up with almost $0.15 per pound. A lot of the plants have the capacity to modify the mix at a certain proportion. No one can modify the mix entirely, right? But this is a photograph or panorama of the commodities.

That's very important to always look at this and see that the company, besides being an agricultural production company, it's a company that's involved in the development and commercialization of properties. So there are some things that are really bad for the production, but it could generate opportunities for the company. So we always keep our eyes open to all of these movements and pricing, and we're going to provide more details about how the strategy has been commercially in the company. Next. Well, now, when things are tough, prices are tough, and you can't do much, you have to work in-house, right? So my friend Gustavo has been around for twenty years, and he said, "Costs are just like nails. We have to cut them every week," right? And trying to find the best way to allocate our resources, right?

On this graph here, we show you basically the moment where we had... We're talking about the current harvest that's currently underway, and the moment when we took on the position of the purchases of these inputs. The first graph shows MAP, where you can see where we were at this moment and how we were buying MAP at $640 a ton. There was a peak, and then it went back, and now once again, it's starting to go up a bit more. Then, chloride, we also had a very effective purchase at about $308, and there's a lot of volatility as well, right?

We've always been monitoring this currency situation, and when we had the budget, we had a projection and a budgeted amount of six, and for inputs of 5.90, and we've been monitoring this. With the reduction, we were able to lock this in a bit more and get the right higher prices, and now at this low bottom level, we've been able to lock it in the opposite, right? Pre-pay a lot of what we had in dollars as inputs to get lower prices, and this has been leading to significant savings in defensives and in some inputs, about 7% or 8%, which is a lot if you talk about commodities. On the right side, we can basically see the position taken with everything, and what's missing is basically just something related to sugarcane, let's say.

Then we show the exchange ratio that's already been worse. It got better then, and now it gets back to showing some signs of a peak, but not such a significant peak. As you have, I always tell the team, when we have a lot of turbulence between the price of the sale, dollar, and other variations, we're always looking at the exchange ratio to try to find the best moment to lock in agrochemicals, fertilizers, and this is where we can see this graph, and I think it's worth mentioning the decision-making process of the company at the right moments, right? One more. In cattle raising, we've had significant reduction in the volume of production, which is normally due to the sale of the Preferência farm.

I'm really humble in saying that when at the company, we think we should have a basket of products, we're really focusing on reducing volatility operationally, productive volatility, and the volatility especially of prices in this basket of products. But we weren't keeping our eyes open that much to having different crops that could maybe generate better liquidity to the sale of land. Of course, we knew land with cotton is worth more. We always tried to add value, but here's a classic example of this. When we saw we were selling always the grain farms, but when we saw that there was a recovery in the prices of cattle and beef, that started heating up the market, and was in the Preferência.

It was in our portfolio for fifteen years, but we were able to complete a sale that was very significant for the company in the middle of last year. This brought in important results in a unit where we had very limited expectations to implement grains and other crops. It was really a cattle-raising area. So what we can show you here is the harvest and a bit of the reflex here. As I mentioned, we talked about the harvest that started in a bit of a turbulent scenario when it comes to rain distribution, right? That brought in two factors.

Pastures were delayed in growth and sprouting, and that also, this delay in the pastures growing, which generally led to volumes of rain that were also very low in these areas where we have cattle-raising activities. But then after, from fifteenth of January on, it kind of got stabilized, but this reflects the overall scenario of the quarter. That's why the photograph in cattle raising is limited. Of course, we are still quite optimistic. We're talking about 470 grams of daily weight gains, and we're looking at a photograph of the drought period, right? But we're looking at this scenario of July, which is already the drought season, limited offering of pastures.

In December, you have this delay in the beginning of the rains in October. So in the quarter, that already kind of compromises this a bit, but nothing is too concerning. We're going to reach the numbers because of what happens and helps a lot is the production of small calves that are gaining weight, and so that's advancing really well. Now, we're going to move on to a photograph here that we say we have to show good news and bad news. This is a photograph of the sugarcane year over year, and I think this is a huge challenge.

Last year we had two significant events take place, especially the ice period with a low in the southeast of the state of São Paulo, which affected some of our sugarcane plantations with this frost and ice. And also, we had a situation of a fire in São José, where we had a big plantation of sugarcane that burnt. When it burns, you have to harvest it beforehand, so some sugarcane has a later average cycle. You have to cut that down right over there. You don't lose all of your sugarcane, but it won't complete its full cycle, and this leads to two impacts. First, the maturity, right? The level of ATR, and there's a lower impact in TCH, but the biggest impact is in the maturity level.

You have to harvest sugarcane that hasn't reached 70% of dry material, and so it's almost like the fruit's not ripe enough, right? It hasn't concentrated all of its sugar yet, to simplify things here. But this led to an effect in productivity, but as I mentioned, we've been keeping up a good productivity in the sugarcane plantations this year. It's a lot better than last. Next. Here we can see a photograph that we like sharing a lot, which is the company's capacity to work in the real estate pillar and operational pillar in a very effective way, right?

On the left side pizza, you can see that we've been keeping up our productive area in the company, despite the fact that in the last few years, we have took advantage of commodity prices and are also a company that sold a lot of areas.

` tags Please paste the transcript content you'd like me to work with And land, and had a significant amount of sales in the last four or five years. We can see this cycle and I think we must be a cyclical company that captures moments of opportunity of the commodity prices, and that's been affecting the land prices as well. So looking at it very different as well. The company, when you look at this graph for quite a while in our presentations, you can see that there's a very high concentration of sugarcane and soy. And the company, in this important strategy for diversification, mitigation of risk, searching for better results, the pizza graph has been improving more and more, and it has becoming more significant with other crops.

On the right side, you have the two graphs that also indicate, and we're showing a bit of the breakdown of our properties, which are our own land and also leased land. There's no magic number. We've always mentioned that leasing needs to bring operational results and stabilize our results. Our own land should be efficient with the allocation of capital. So our own land allows us to have a cost of capital that's cheaper, and so this combination, we can... properties and our own properties, is something we closely weak, so that we can always be around 50%, or 55%, or 52%. Because that's where we understand is our main formula to have cheap cost of capital and really consider operational stability.

Especially where you have a lot of volatility in these open areas in the company, so when you consider leasing in more premium areas, especially in Mato Grosso, where we had a lot of leases there. There's still some work to be done as well. Nothing's ready yet, but we understand that this company will be stabilized in a very productive manner. Here, I've already gone over this a bit, but here you can show a summary of what we've been talking about. Harvest plantations complete and in good conditions, and that considers good conditions, and we started the year with a trend that was a weak La Niña, and we also see climate scientists mentioning this heading to more of a neutrality. Well, we always say it's fundamental, right?

Our experience in these bordering zones, right? And so when you have this, of course, La Niña is strong, you're going to have an important significant one. It's not-- You also have... But when you have El Niño or the neutrality, El Niño or El Niña, that's closer to a lower intensity, have better rain distribution, and that's the condition that's setting this harvest in Brazil. Next. Well, here we bring in a bit of detail on what the company is searching for ways to do in a more efficient way through the treasury team, led by Ana and Gustavo, and we've been searching for ways to find efficiency, right?

Setting up an increase of 2% or 3% productivity is difficult year over year, but losing 2% or 3% in the commercial formula is really easy, right? We're going to show you some of the derivatives, and that's been led by Ana and Gustavo. Commodity soy is about 65% close at $10.80. Everyone saw this soy reached $10.20, $10.50, but... We've been considering this, and we have a currency that's sold at about 55%, and it's very different than spot, right? As I was mentioning in other calls, it's a very volatile year, a lot of geopolitical insecurity, and it's a year where we have to bring volatility to our favor.

We've already sold this soy, this currency, and part of this is already kind of closed off. Part of the soy will most likely be left to be commercialized in the second semester, as we've done. Cotton is 6% locked in already, and it's a crop where we're a little more stuck because we had a perspective for daily plantations, we reduced this. At that moment, where we already had sold about a piece that had represented 30% or 40%, there was a peak of the dollar. When you look at cotton, there's a - it's different than looking at soy. When we look at soy, we're considering... Here, we're considering this for December, right? So we already have a lower percentage because you have a longer period, right?

Two things happen here, right? The longer period was about December 26th, and the reduction of this area was quite beneficial because you had a better sold dollar, right? That's been sold at $6.65, right? Below, you have ethanol for the 2025 harvest, and that's at $2,670. After this, we decided to - we saw the prices were recovering, and so this is really important to reach the prices we needed at that moment, where ethanol was reaching $200 to $300. With corn, we have a little bit less sold due to the off season harvest, and it's kind of what we mentioned now, which was the issue of better premium captures in the different locations.

This also has made things a lot easier. We can capture better prices, and this is what kind of justifies a little bit less corn locked in, right? And just a minute. Then receivables from farm sales is an important line in our balance sheet. As you all know, there is a significant volume of over 5.5 million sacks, and we have over approximately $120 million in this line receivables. All of the receivables of the current harvest come into the P&L, and then it's kind of like a photograph of what we have of receivables from farms this year. I sold at $10.78, so 67% at this level, and currency at $6.16.

When we look at the position of the dollar, we look at the global position, but we also consider the allocation because the receivables in farms are in certain units that maybe we don't even operate anymore. So we have a segregation that's very significant, and we like demonstrating this separately. Next, please. Gustavo, it's all yours, and we'll get back to your questions with the rest of the team here. Thank you, André. Good morning, everyone, and I want to thank you all for your presence of the first six months, 2025, 2026. As André mentioned, normally, it's just when you have a weaker quarter, you generally have the sale of all of the stocks that we had harvested in the harvest for 2024, 2025.

We'll then see that this decision of carrying this product is really positive, right? But also, on the other hand, you have this impact, that's what André mentioned, of sugarcane, and for the first time in a long period, we had achieved productivity that was very low. So we had almost 200,000 tons and another 200,000 we lost due to the burning and some other operational issues we had as well in Maranhão. We started off with losses of R$61.7 million, and in the same period of the previous year, we had already reached R$77 million. On the right side, we can see the results of this period. The first graph on the top, R$77 million at R$71 million negative.

Then you have the main variations that we'll see as volumes of prices, which is mainly in sugarcane. In some products, especially with soy and corn, we had the savings, and fertilizers were a little cheaper, but that was not enough to offset or compensate the impact in sugarcane. Then we also had the sale of Taquari, R$207 million, and the commercial expenses. The impacts also of the financial results this year were better performance than the previous year, and this is something we can see in the financial results as well. In the derivatives, we did not have such volatility.

It was kind of at normal levels with the sale of soy and corn, but at that moment, the currency had reached $610, $620, and that had impacted the results that we had mentioned. It was kind of mark-to-market, but that had been very relevant, right, in that period. I think these periods, the derivatives behaved pretty well, especially with currency bringing more positive results. But of course, results that are not going to have an actual cash effect. If we see the cash effect, the revenue from financial investments, always above CDI, and then also the impacts of the interests, 15% that we can see as interest, passive interest, right?

We have a net impact. Last year, in this period, we had lower interest. Also, maybe not that different, but the impact was about R$11 million positive, and R$38 million negative. Because of the interest, we were considering it about R$20 million. This was something we always discussed. These lines are the ones that have the actual cash effect. All the rest is mark-to-market or updates of fair values, lease values, which are receivables as well, from farms. As mentioned, we have 5.9 million, actually almost 6 million, sacks of soy, and the mark-to-market for all of the months and quarters is generating a variation, and last year it had been positive. This year, it's negative, especially because of the drop of the dollar prices.

From a financial earnings perspective, it was not that relevant in the results, and it didn't impact that much. But if we consider last year, we had R$107 million, and now we're talking about R$71 million. We can say that there was about R$90 million, and actually, the adjusted operational results. Then you can see in the graph at the center, you can see the main variations. As mentioned, soy was R$3.7 million, corn was R$20 million, and cotton was R$9.9 million. Other crops, we diversified our basket, and the impact of all of the sales of stocks were very positive.

What really hindered us during this semester was sugarcane, with $54.58 million. Then a bit more of the details of what happened to this product, right? We're talking about this is a stock decision, trying to capture the best premiums in this semester. Then we had margins of like 28%, 29%. Very similar, of course, although prices were a little bit lower during the semester. We're talking about $2.037 billion. Last year was $148 million, and the costs have been a little bit smaller, especially for fertilizers. That generated $52 million, and so that was against $48.8 million, right? So then here you can see the explanation.

For corn, this was last year we had mentioned the company really reduced the off-season harvest. Because at that time we had a very low expectation for prices and a lot of stock. And so for fertilizer prices, we normally all of the technical pack as well. We understood that it was a great moment to reduce this and reach a better decision, right? So with this, we would be able to also reduce the losses we had. We always mentioned that the farm needed this rotation. You plant this, and sometimes we understand that this is better to provide the sustainability, right?

Last year, this product generated a loss of R$5.3 million, and this year, with this period, with the arrival of a lot of industries in regions where you have different locations of the farm, this generated the possibility to have better prices because this also... they also pay some premiums and to ensure the stocks for the production and the plant. But even so, what we understand is that the logistical impact upon the price is what really generates this differential that's very significant, and it generated the R$15 million of results that were gross results that were a lot better, and the expectation that this should be kept for this next harvest as well. Beans, we always say that they're more for the sales in the external market.

The margins are not always better, are not always so positive, but we understand it's very important to keep this market with a bit more diversification. Sugarcane, we also once again are talking about 1.3 million in tons, and that was the previous year, and it also showed above 80 tons per hectare, and that was kind of the average in the company. Even a little more, right? 83, 84 million tons. This year, of course, we had these issues we mentioned, we had 970,000 tons during the semester. The price, although Consecana was always very positive, besides the losses in productivity, we also had problems with ATR. We lost sugar, right? Last year, we had an average of 140 kilograms per ton.

This year, we reached 131, 132 kilograms per ton. It also impacts the price and the costs when we consider there's an increment, because you see the absolute values for the same amounts of hectares, we have R$131 million, and last year we had R$147 million. But the main point here, the main issue here, is that the costs are pretty fixed, right? After we harvest, we need to add fertilizers and then treat the land and the soil, and use all the fungicides and all of the inputs required for our process to keep the sugarcane plantation. That generated a reduction in the tons, which makes the cost per ton a lot higher.

The results from last year, seventy-eight million reais, this year, twenty million reais, and this is where we really feel the impact operationally in the company's results. All the other products like cotton and especially the pluma cotton, which is a crop we still have, but we can see that the margins are still very low, like 8% or 6%. It's a crop that we were betting on in areas that have irrigation, and we're going to search for the right moments also to work with these cotton lint and reach the levels of hectares we had, right?

What we understand is today, the capital costs don't make it unfeasible, but make the returns very low, and especially when you have a lack of security in these areas that were planted, and that makes the company still be a little more careful about this. For cattle raising, as we mentioned, the main effect of the purchase in season here, I want to remind you that we have a fair value part that's not included. When you consider this, normally, the cattle heads in the market, this generates results also, and we can exclude this also to analyze our EBITDA. On the next part here, we can show you the debt and the position financially of the company.

We have a debt of $886 million reais, which is similar. It was similar to what we had on the 30th of June in 2025, with an equivalent cash position of $73 million reais, net cash $802 million reais. Normally, this is the moment where we have the lowest level of cash and the highest level of debt, because it's the moment where, as André mentioned, we have all of the fertilizers, inputs, and most of what we use operationally was already acquired, and we already have paid off expenses. That generates these differences.

What I always say, and what I think it's important to remember, is that from the R$686 million at present value of receivables, sales, and the farm, which is a pretty big stock that we have to be received, the cost of debt is pretty low, and it allows us to keep a bit more comfort, about 94%. Here we can see on the right graph, it's lower than one year, which is the working capital to plant this harvest of R$360 million. And two to five years, R$500 million, which is basically the issuances we performed to implement some investments and irrigation and transformation of the areas, and investments that mostly were already complete.

We are expecting the returns of this cash flow to be able to also advance, right? But at the bottom, we can also see the indicators that we always monitor closely with our financial committee. We believe that the company's position is not concerning, but of course, what we expect is a reduction of this interest rate, right? Because we believe it's very significant, the impact, right, that this would have with the levels of interest rates within the company, as well as in the hole market, right? It's difficult to work with such high-level rates of interest as we still face and operating. I think we've reached the end here, and we'll get into our Q&A session.

Thank you so much, everyone. Thank you, André. Thank you, Gustavo.

Well, we have three people here waiting in the queue to ask questions, and first we'll have Guilherme Guttilla from BTG. Please, Guilherme, you may hop in with your question now.

Hi, guys. How's it going? Good morning, and we have two questions on our side here, please. The first one is if you could give us a bit more info on what's behind this shift in productivity for the cotton guidance, right? Just so we can understand more about what changed in this process, right? And then the second question is about sugarcane. In our last conference calls, we actually talked about this, and you guys mentioned this a bit more than the market, right, in regards to this last harvest of sugarcane. And now you guys are expecting some strong recovery, right, for this next one.

What we wanted to understand is how you're looking at this scenario in the market overall, and how you're considering if there's going to be a recovery, and what this next harvest for sugarcane should be like. Just about cotton, I just wanted to re- if you could just give us a bit more context on the question. You want to know why the company reduced the cotton plantation, or what our vision is for cotton? If you could just review that. A bit of both, but more related to productivity. All right, in regards to the change in the guidance.

Okay. Guilherme, thank you for the question. As always, very great questions coming from you guys. But first, about cotton, right? What we noticed is we were really relying on cotton in Bahia, and that's the first Brazil agro photograph, right?

We know Bahia is a place with a lot of volatility, with a production cost that's very high. What we started to design and structure, and the company has been working on this stability more and more, right, with the cotton production. We're in the final deployment phase of the irrigation project in the Fazenda Jaborandi farm, and we also have some other pivots as well. We've been focusing a lot on all of our efforts for cotton production, right, on irrigated agriculture. So a view the company had... We look at the profitability, and when you look at soy with a contribution margin at about 29% to 30%, we see cotton with the cost of production, and there's results in reais per hectare.

We see a lot of capital under risk, a lot of cash working at a moment where you have such high capital costs, so the company readjusted. We see the cotton of sequeiro. We took all of the cotton from the off-season harvest, right, in the Xingu region, where you have challenges due to altitude, et cetera, and you can see days that are maybe not that cold, right? So it's really important. You have to dosage the consumption of energy through this. When at night it's colder, the plant can breathe with greater ease, right? So in that region, we reduced 100% of the cotton there, and we're focusing on cotton in this irrigated area in Bahia. This is going to be cotton that's high productivity.

We closed the levels of productivity of our Projeto Jaborandi, that's about 370, 380 per hectare, and everything's kind of moving towards having a year that is very... At this moment, we're reducing this a lot, is the cotton of sequeiro, right? There's another region for this, is that part of the Fazenda Chaparral farm, we have bought a lot of this cotton. We sold those 8,000 hectares, which is a very interesting deal for the company, right? But the profile of areas that are mature kind of changes a bit, and you have mature areas, but you also have the weight of the new areas that's greater. We have to operate and have a turnaround of this, of the crop transition, right?

There is a big challenge also with sanitary conditions also between thirty-three and thirty-four applications to control an insect that's really a big problem. It's a crop where you can't make any mistakes, and you also can't put shareholders' capital at risk, and we're directing cotton to irrigated areas here in Bahia. Together with this, we're also increasing irrigation projects, the company will continue to produce cotton in a more efficient way. For sugarcane, what we did was the following. First, this year, we'll have-- we had significant work done to kind of change the nutrition a bit and place more fertilizers. We had significant work to also reduce issues in the sugarcane plantations. Ever since the pandemic, there was discussions on this.

That's kind of like a sector market perspective, right? There were moments where the production plants didn't even know when they were going to stop processing because they didn't have time or space to stock up alcohol, right? So at that moment, everyone kind of moved away from the renewal areas, and you carry this for two or three years for the cycle of the crop, which is five years. So overall, us and the sector had aging of the sugarcane plantations, right? The sector still has a big challenge, which is the cost of capital, and that's pretty high. And with this, you pressure the renewal of the plantations.

In our case, I would say that we ended up kind of accelerating what we needed to do, because we had to produce more in the unit there in Maranhão. We have potential, we have water, we have a good partner there, and we're accelerating this. This is also a factor that makes us ready to have a bit more sugarcane in the next harvest. We accelerated the plantation of sugarcane in this harvest compared to others, which is the sugarcane that's going to be harvested now. This is also... We're going to get back to planting this around 2,600 hectares in this unit. The company, overall, what we're understanding in the improvement of the sugarcane is the issues of management and a bit more fertilizer.

We had another challenge also, I think, which was every year you have a different challenge, right? That you have plagues, diseases, and other issues, but in sugarcane, we had more efficiency to find and control what they call the camalote grass, which is a big challenge, but now this is really well controlled, and the areas are very clean. So all of the detracting factors for productivity, we've been able to work on and interact in a very precise manner with telemetrics, and we've been working on improving this productivity. So when you look at the sector, what are you seeing in the sector? Well, the overall sector is really concerned with the price of sugarcane, and so we've seen this in the last few years.

There's been an acceleration in the plants that only had ethanol, and they had the mix of sugar, and then everyone was more geared to sugarcane. The overall scenario now is going to be a harvest that's more alcohol-based, right? But in these two or three years of changes, we went from ethanol-sugarcane ethanol that was three or four million tons to almost ten or, sorry, three or four million liters for sugarcane to corn ethanol. That was very different, so you also pressure ethanol. But there's still an interesting parity, and the big question mark is going to be... Well, I can't see a sector that, and you guys have seen this better than I can, where you've seen this movement, and it's very significant in the sector.

Yes, there's going to be some recovery and some production plants that are sold. Whoever buys this wants to place their face in the business, right, and search for what's best. Yes, I think there could be some kind of a recovery in the sector. We're not optimistic about the price of ethanol and sugarcane in the next year, but we're optimistic for sugarcane and ethanol prices in the next cycle. Why is that? Well, because we know the stability of productivity in India always, and we know the cost of capital in the last few years held the renewal of sugarcane plantations a lot, right? We really believe that this will lead to some limitation of productivity.

We want to be really well-positioned to have productive sugarcane and working in the opposite direction, working towards a reduction of the average age range of the plantations, right? So this is our strategic view as a company and our view of what the year will be like. I don't think it's going to be favorable pricing, but it does not seem that we're going to have years of super good pricing. And so we're actually starting to visualize a possible recovery in the next two or three campaigns.

Yes, that's great, André. Thank you very much.

Now we're going to open up Bruno Tomazetto's audio at Itaú BBA.

Hi, guys. Good morning, everyone. Good morning, André, Gustavo, Ana. Two questions on our side. If we could just start getting a follow-up on the discussion on sugarcane.

That was an important detractor as well, and considering all the dynamics you'd mentioned, the icing and frosting and all of the plagues, et cetera. But when you look at the future with this, you have for the harvest of 2026, is this already— are you already considering some impacts of that we saw in 2025 that could be carried over to 2026? And how are you going to measure this marginal movement in the last few months, right? So we're just trying to understand what's left as a space once we have this initial comment, right? And so then, André, more of a long-term question here. In Brazil, we have— we're not used to seeing this reduction of planted areas, right?

We also aren't used to seeing three or four harvests of high interest rates and all these other instability, geopolitical instability, and there's a lot of things happening at the same time that weighs in profitability of farmers, and there's probably going to be a limit to this at some moment. Our question is what we want to provoke you all about is: Do you believe that there's going to be, at some moment, an adjustment for the reduction of this planted area in Brazil? If so, what would we have to see to see this scenario take place?

This is a farmer where we're going to have a big volume of grains. This should be a positive variable, especially at this moment with worse profitability.

What's the limit of this disruption, and what's missing for this to happen? That's a million-dollar question, right? And then we'll talk about where this, where we believe this is headed, right? We've been using a series of different factors to be more precise, ever since raising data with drones to identify and generate the overall productivity maps and aspects in the sugarcane, and then also show the telemetrics for this location. At this moment, what we're seeing and why we're a lot more optimistic is because we see that this year, what we call how sugarcane is going to grow, and that's where we measure this spacing, right? And so we can see this distribution that's a lot better, and we're in February.

We still have, like, four months, basically, for the growth of sugarcane, but we already see this distribution of internodes that's better. Last year, we, despite having rain in the formation of the greens, we had a summer that was really hot. Plants, above this certain temperature, they stop and they say, "Look, that's too much. I'm going to have to-- So I'm going to start losing a lot of water here," right? That also showed that we had a shortening of the width of the sugarcane that we're not seeing this year. We did have peaks in temperature, but they weren't that many sequential days as it was last year in December, January. So these two factors, for us, are extremely decisive for productivity.

Now that what's starting to happen from March on is that we still have biometrics, and then people start coming into those points that were raised and start putting the bio- performing the biometrical analysis to understand how things are doing. But visually, considering the extension of the internodes and also the width, the sugarcane is very different, right? These are the main tools. The second question is the reduction of the margin. You always need to, and I've been talking about this a while, right? You have to have many years, so you can actually understand the effect of this reduction, right?

But what I think changes in this scenario and what changed in the last few years, and you were very precise in your comment, you said the area was being expanded, but we included a factor which is very important. The decision to open up areas for farmers, and as to how the region was always based on a contribution margin criteria and profitability. Civil society as a whole understood other criteria of sustainability and started adding restrictions to the conversion of new areas, even if they had been authorized adequately by the authorities, and that generated this external factor into this sector, right? So the farmers opened up a huge amount of land, and the profitability and contribution margin factor was not decisive anymore, right?

The farmer said, "Look, if I don't open up my farm until 2025, the tradings, they're not going to buy grains." The other trading saying they're going to do that only in 2030. What happened again, which is kind of what eliminates a bit of this factor, right? I'm not saying you have to deforest an area, but adding an exogenous or external factor that was pressuring something, and the rationale started to be a little box next to it, and maybe not as important as the irrational factor, which is the external factor and the opening of the areas due to the limitation of the traders in not buying grains from areas that are deforested or areas that were open after 2025, 2026.

In our understanding, and with everything you've seen in the last few months, we're starting to deactivate this huge bomb of external factors, right? And then we're going to have something that's a little more rational. Then we'll see the cycle of the soy, and if you guys like looking at numbers, you're going to really like this data. If you look at the historical series, in about a hundred years of soy prices, you'll see... And I had the opportunity, actually, to watch this study closely, but you'll see that at every-- we have, like, a cycle, right, of soy every six or seven years, and that's what we see in the data when you look at this historical series of many years. Then you can see if this is deflated or not. But why is that?

Well, prices that are attractive, farmers have a contribution margin. There's a carryover. They have to harvest, perform this, and then they start expanding, right? When they expand the area, the prices have a retraction, and then you have the expansion of the area in this historical series. When you see this, on the other hand, you have to consider the demand, right? So what's going to happen is you're going to have restrained prices, and then the demand of soy is a little weak, right? Like, one and a half, 2%. So you spend like three or four years, and that generates like a hole of 6%, 7%, 8% of the demand. Then once you go back to increased prices, incorporating new areas in the system, et cetera, so...

But we're talking about a process, something that's infinite, right? And so you would incorporate a lot of areas that are easier and more productive, now incorporate more areas with greater difficulty and less productivity, right? So this curve of recovery and responses, it becomes... And so now we're going into more areas, but less productive areas, right? So the other factor that I think was fundamental to incorporate the areas in Brazil in the last few years, which is mostly like 60%, 65%, is most of them did not come from open areas or opening up in the Cerrado. They came from incorporating pasture areas. And that would make real sense if we have these investment and incentive programs from the government.

This area, when it's incorporated with high productivity, kidnaps more carbon. The second factor that tied into this a bit was the price of cattle. So you had high soy, and then they would say, "Well, it's better to lease to plant the soy than to have stress with my cows here." But when you see the recovery today, this is also a factor that eliminates a bit of this pressure. Anyways, the opening of areas and incorporating new areas in the system is always connected to the contribution margin and profitability. In the last few years, we had external factors, and we also had this big valley, which was also a significant movement.

So saying, "Look, I'm going to make a hundred and sixty kilos of beef per year, or am I going to lease this farm in this average period?" In our understanding, we are estimating this, and we eliminate this pressure of conversion, so that area, that's not the area that's completely degraded, right? But this is going to be recovered in the contribution margin. My understanding, and when you look at this in the last year, you see soy was already bad, and Brazil incorporated about eight hundred and some thousand hectares of soy. So this year, everyone is saying, "Look, we're not going to incorporate eight hundred." We're going to incorporate maybe, in our understanding, like, four hundred, five hundred thousand hectares of soy. So in the next year, then we're going to get back to incorporating what's basal, right? So maybe two hundred, two hundred and fifty thousand hectares of soy per year, and then that becomes a number that's going to be adjusting that supply and demand ratio. So you're always going to have farms that are going to be open, people that are expanding, but in the last years, these two factors were accelerators for this process.

Excellent. Great. Thanks, guys.

Now we're going to open up Leonardo from XP. Great, so the connection is excellent. Ana Paula owns my agenda here. She- anyways, okay. Actually, I had a bit of a follow-up about this point here. You had a lot of relevant information transmitted here, and also you have like a land owner, right? But of course, you still have a big potential conversion, but maybe it reduces a bit of the short-term pressure, right?

But if we get into more details, just to see if I understood your reading, we had the trading factor with the soy, but when you consider this end of the Moratorium, do you think this would be feasible in the short or mid-term? And then, if you think about this dynamic of price of land, and so, do you think this is an opportunity? It maybe a risk, and groups that kind of move in this direction. These are some of the aspects, right?

Trying to get more clarity on this point here, just to make it easier to understand. The second point would be even more of a short-term vision, which is something we've been discussing this dynamic for a few years. I remember one of your phrases on how soy has to drop three or five years to really start being priced in the market, right? We've already seen this in 2023, 2024, 2025, and 2026, so it's kind of in this window and this entire scenario, profitability of the farmers and the financial health of the farmers has been very concerning. It would be kind of favoring the scenario, right? So that's really what we consider from the soy farmer perspective, right? Where we can add financial health, and also with this, you also have even a bigger supply, right?

You have a new dynamic also, where a lot of land going to the hands of funds and banks are being auctioned and searching for operators, right? So you have this factor on the Moratorium, but then do you also consider more liquidity maybe in the market for land and real estate, and maybe even more attractive pricing, et cetera, that are focused on this, as this appears to be an opportunity? Leo, that's a great question. Just trying to split this into some phases here. First of all, the incorporation of new areas and the big groups that are the ones that have the biggest concern with ESG and all of this, they certainly create a basis, but that's not where you move your supply-demand ratio, right?

For our agriculture, I always mention the beauty of agriculture is how it's fragmented, right? So if you add up all the groups in the states, et cetera, the areas incorporated in the last few years will probably represent three or four percent. So 97%, 96% come from farmers to farmers, right? So I would say that the pressure of the trade for industry and the industry will... Well, the qualified company will pressure this development, and I don't think so, but if they do, I don't think it's going to change the equation of productivity. What changes this equation of the farmer when they have this limitation, and that's where you kind of shift the equation, right? But I don't think there's going to be pressure, a huge pressure. I think it's going to...

I don't know if you guys got the opportunity, but once they called me to have an interview at Globo, and I said, "Look, as a society, we're pressuring the environmental system wrongly. We need to consider how we pressure this. The way we did it, it distorted everything, right?" The equation and profitability was left sideways. I don't think the exit or the solution of the Moratorium will generate this impact of like, oh, now it's a huge, crazy race or a lot of openings now. No, but now we're going to get back to a rationalist perspective. The rationale is, opening up areas now are really difficult. You're going to open up an area that's forty-six, and the first year you're going to lose money. Now we go back to more of a rational equation, right?

Now, what could happen is in a new cycle of soy, if we have a scenario like this, then yes, you could have an increase in the expansion, but that would be due to a recovery in the contribution margins, right? So I can't view that we've reduced all the pressure and now things are going to move, right? But when it comes to prices of land, this is dropping already, and we always receive information about this. But fortunately or unfortunately, some people think it's good, but we think it's bad, the process of the judicial recovery is not as it was in the past. In the past, like a farmer would tighten up, and he had five or six farms, he would sell one, and life would move on, and things would keep on. But now, people don't want to sell land.

They want to start a judicial recovery process and keep up in their activity, and that made a lower cycle of land. This is kind of happening a lot at a lower level, right? When you look at the bank's recovery recovering land, the average property of $600, $700, $800 is always coming into the market, and that comes due to this tightening of the contribution margin. Yes, I think that the prices did drop. We've seen a bit of this reduction. It's very like one-off, but the big land extension, what you still see is you have groups that generate liquidity, and on the other hand, you have persons offering that extension with this instrument of judicial recovery, right?

It's complex, but I do see a reduction in prices, and as I mentioned, two or three years, right? We're in the third year, and we're already starting to see this. Farms that would arrive at 600 sacks of soy, now you can buy 450. But when you consider the 450 and the cost of capital that Gustavo mentioned, you still have a non-attractive return rate.

Even with this reduction, we're being penalized a lot, right? With the cost of carrying. To accelerate this a lot, it's a bit of the logic of the actual assets, right? With low interest rates. If we have a reduction in the Moratorium and lower interest rates and a scenario of... You have three factors that are important for this. So you have high interest rates, a positive scenario, and then you have this issue, which kind of affects. We're definitely going to be more buyers than sellers.

All right. Thank you very much. Well, I think we've reached the end of our call. Thank you all for your questions. Thank you, André, Gustavo. If anyone has any questions or unanswered points, our IR team is available to clarify, and have a great weekend, and we'll see you in our next quarter.