Good morning, everyone. We are here once again in the call of BrasilAgro.

Today, we're going to be presenting the results of the second quarter of the year of 2025/2026. For those following us in English, the presentation is available on the chat.

Now, I'll pass the floor to André Guillaumon, our CEO, to begin.

Thank you so much, Ana Paula. Thank you, everyone.

Once again, it's a great pleasure to be here with you, but I think this call has been disruptive. This call we are doing directly from the farm.

We have matched agendas. We're here in Chaparral, and we'll be here.

As it's just we have everyone hoping for the best here. Let's hope that the provider is good, and it's going to work well.

Telemetry here works well, and we hope this work will work. If this works well, I'm going to do all of my calls from the farm.

Thank you, Ana Paula. It's just you can stay in São Paulo, just direct from my operations, right?

Anyway, thank you, everyone, for being with us today. We're going to be disclosing our numbers for the semester.

We've already talked about the semester, and you saw that we had included the slides up ahead on the climate conditions, but I'm going to give you 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 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. In Bahia, I'm here, and it's always a huge challenge.

The plantations are doing really well, spectacular. We have the last rain 5 days ago in the farm.

We're expecting another rain period this week. This is an overall panorama.

Sugar cane has been recovering a lot as well. I came from the São José farm yesterday.

I was in many different sugar cane areas there, and the sugar cane is doing really well. They're sprouting well with replantation rate that's very good.

We accelerated the plantation of sugar cane. We planted a bit more sugar cane 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 100% 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 16 units we operate. We're really happy with this challenge we overcome, and the team was able to deliver.

Now we want to improve more and more of the accuracy and telemetrics. We also opened up a COA in Palmas that's doing really well.

There, we've also been monitoring all of the operations in the company. We'll talk about the first 6 months in the company.

We had a revenue of R$470 million and adjusted EBITDA of 71.3 million and this loss of 61.8. We're going to get more details into this soon, but 6 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, it's a huge challenge this semester, but we're going to get into more details in a bit. The company will also show us how they're working and what they've been doing.

One more slide, please. 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 50 million tons, and Brazil is once again heading to a super harvest. A few houses are talking about 179, 182 million tons, and as things are moving, that's really the reality.

Soy here and in Maranhão, Parnaíba, and Piauí, I've been going around, the soy plantations are really spectacular. A lot of the soy have been above 65, 70 sacks.

This number that was an uncertainty in the market in the past 2 weeks really has been demonstrating more signs of confirmation, and this has impacted prices, but have 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. The distribution of 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 corn, and the positive ratio is a lot better for corn. 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 of Trump advisors 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, and so we're really optimistic at the prices in this sector.

Then for ethanol, the end of last harvest was very positive, went up significantly, and that helped offset the bottom graph, which was sugar cane. We left those prices that were those high prices, 22, 23 cents.

We started the harvest with 17, and we wrapped up with almost 15 cents of a 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? 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 a agricultural production company, it's a company that's involved in the development and commercialization of properties. There are some things that are really bad for the production that could generate opportunities for the company.

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.

Now when things are tough, prices are tough, and you can't do much, you have to work in-house, right? My friend Gustavo's been around for 20 years, and he said, "Costs are just like nails.

We have to cut them every week," right? Trying to find the best way to allocate our resources, right?

On this graph here, we show you basically the moment where we're talking about the current harvest that's currently underway and the moment where 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 KCL, 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. When we had the budget, we had a projection and a budgeted amount of 6 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? We 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 sugar cane, 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 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 lock in agrochemicals, fertilizers, and this is where we can see this graph.

I think it's worth mentioning the decision-making process to 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 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, and we always try to add value. Here's a classic example of this.

When we saw we were selling always the grain farms, but when we saw that there is a recovery in the prices of cattle and beef, that started heating up the market. Fazenda Preferência was in our portfolio for 15 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.

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.

Then after, from 15th of January onwards 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're 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?

We're looking at this scenario of July, which is already the drought season, limited offering of pastures. Then in December, you have this delay in the beginning of the rains in October.

In the quarter, that already kind of compromises this a bit. Nothing is too concerning.

We're going to reach the numbers because what happened and helps a lot is the production of small calves that are gaining weight. 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 sugar cane year-over-year.

I think this is a huge challenge. Last year, we had two significant events take place, especially the ice period in the southeast of the state of São Paulo, which affected some of our sugar cane plantations with this frost and ice.

Also we had a situation of fire in São José, where we had a big plantation of sugar cane that burnt. When it burns, you have to harvest it beforehand.

Some sugar cane that has an later average cycle, you have to cut that done right over there. You don't lose all of your sugar cane, 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 on TCH, but the biggest impact is in the maturity level. You have to harvest sugar cane that hasn't reached 70% of dry material.

It's almost like the fruit's not ripe enough, right? It hasn't concentrated all of its sugar yet, to simplify things here.

This led to an effect in productivity, but as I mentioned, we've been keeping up good productivity in the sugar cane 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 took advantage of commodity prices and positive estimates, a lot of areas. Land had a significant amount of sales, and we take advantage of the cyclical company.

We must see this, the cyclical company, capture at moments of opportunity of the commodity that's going to affect in the land prices. Looking inside the farms, the company, when we look at this graph on our presentations, we've seen that we have a high concentration of sugar cane and soy, and the company is an important strategy to diversification in mitigation of risks, searching for better results.

The pizza graph is improving more and more, it's started to become more significant than other crops. On the right side, we have other two pizza graphs also we're showing the breakdown of our properties, which are our own land and also leased land.

Here there's a magical number. We've always said to you the way that leased land needs to bring operational results and stabilize our results, and our own land allows to be efficient to allocating capital.

Our own land allows us to have a cost of capital that's cheaper. Because of this combination, we miss our properties and our own properties is something we closely watch, so that we can always be around 50%, 55%, 52%.

It's always there because we understand it's our main formula to have cheaper capital and to stabilize operational stability and especially where you have a lot of volatility in these open areas in the company. When you consider leasing in more premium areas, especially in Mato Grosso, where we had a lot of leases there, and 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.

Next. 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 then that considers good conditions.

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. We always say it's fundamental, right, our experience in these bordering zones, right?

When you have this, of course, La Niña is strong, you're going to have an important significant. When it's not, you also have when you have El Niño or La Niña that's closer to a lower intensity, you have better rain distribution, and that's the condition that's setting this harvest in Brazil.

Next. Here we bring in a bit of detail and 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 just 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.

Soy is about 65% closed at 10.80. Everyone saw this soy reached 10.20, 10.50, and so 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 this soy will most likely be left to be commercialized in the second semester, as we've done. Cotton is 60% 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, and at that moment where we already had sold about a piece that had represented 30%, 40%, there was a peak of the dollar. When you look at cotton, it's different than looking at soy.

When we look at soy, Here we're considering this for December, right? We already have a lower percentage because we have a longer period, right?

Two things happened here, right? The longer period was about December 2026, and the reduction of this area was quite beneficial because you had a better sold dollar, right?

That's been sold at 6, 6.05, right? Then below, you have ethanol for the '25 harvest, and that's at 2,670, and then after this, 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 2, 200, 2, 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? 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 over 5.5 million sacks, and we have over approximately $120 million in this line of receivables, and all of the receivables of the current harvest come into the P&L.

Then it's kind of like a photograph of what we have of receivables from farms this year. Soy sold at 10.78, 67% at this level, and currency at 6.16.

When you 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. We have this segregation.

It's very significant, and we like demonstrating this separately. Next, please.

Gustavo, it's all yours, and we'll get back to the questions with the rest of the team here. Thank you, André.

Good morning, everyone, and want to thank you all for your presence of the first 6 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 and 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? Also on the other hand, you have this impact that's what André mentioned of sugar cane, and for the first time in a long period, we had achieved productivity that was very low.

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. How we started off with losses of R$61.7 million, and in the same period of 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 71 million negative.

Then you have the main variations that we'll see as volumes of prices, which is mainly in sugar cane. In some products, especially with soy and corn, we had the savings and fertilizers a little cheaper, but that was not enough to offset or compensate the impact in sugar cane.

Then we also had the sale of the equity, R$207 million, and commercial expenses and the impacts also of the financial results this year were better performance than previous year. 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 6.10, 6.20, and that had impacted the results that we had mentioned.

It was kind of marked-to-market, but that had been very relevant, right, in that period. I think The derivatives have behaved pretty well, especially with currency bringing in 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 interest, 15% that we can see as interest, passive interest, right? We have a net impact.

Last year, in this period, we had lower interest, and also maybe not that different, but the impact was about R$11 million positive and 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, least 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 the months and quarters is generating a variation, and last year it had been positive.

This year it's a negative, especially because of the drop of the dollar prices. From a financial earnings perspective, it was not that relevant, and in the results, and didn't impact that much, but if we consider the last year, we had R$107 million, and now we're talking about R$71 million, and we can say that there was about R$90 million.

Actually the adjusted operational results, right? Then you can see in the graph, at the center, you can see the main variations, right?

As mentioned, like soy with R$3.7 million, corn with R$20 million, and cotton with R$9.9 million. Some of the crops we diversify in our basket, and the impact of all of the sales of stocks were very positive, and what really hindered us during this semester was sugar cane with 54, R$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 28%, 29%, very similar, of course. All the prices were a little bit lower during this semester.

We're talking about R$237 million. Last year was R$148 million, and the costs had been a little bit smaller, especially for fertilizers.

That generated R$52 million, and so that was against R$48.8 million, right? Then here, you can see that explanation.

Then 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.

For fertilizer prices, we normally all of the technical pack as well, and we understood that it was a great moment to reduce this and reach a better decision, right? 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 the different locations of the farm, this generated the possibility to have better prices because 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 and 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. 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 so positive, but we understand it's very important to keep this market with a bit more diversification.

Sugar cane, we also once again are talking about 1.3 million in tons, and that was the previous year. André 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 that we mentioned, but we had 970,000 tons during this semester. The price, although Conセcana 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 kg per ton.

This year, we reached 131, 132 kg 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 147, 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 a process to keep the sugar cane plantation. That generated a reduction in the tons, which makes the cost per ton a lot higher.

Then the results from last year was R$78 million, this year R$20 million, and this is where we really feel the impact operationally in the company's results. All the other products like gosh, cotton and well, 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 feather cottons 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, right, in these areas that were planted, and that makes the company still be a little more careful about this, right?

Then for cattle raising, as we mentioned, the main factor of the purchase and sale, and here I want to remind you that we have a fair value part that's not included, but when you consider this, normally the cattle heads in the market, this generates results also. 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 R$886 million, which is similar.

It was similar to what we had on the 30th of June in 2025, with a equivalent cash position of R$73 million, net cash R$802 million. 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 kind of already have paid off expenses, right?

That generates these differences. Anyways, what I always say and what I think is important to remember is that from the R$686 million at present value of receivables sales and the farm, which is pretty big stock, and 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 that's lower than 1 year, which is the working capital to plant this harvest of R$360 million, and 2 to 5 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?

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 whole market, right?

It's difficult to work with such high-level rates of interest as we still face and operate in. Then 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. We have three people here waiting in the queue to ask questions, and first, we'll have Guilherme Cutillo from BTG.

Please, Guilherme, you may hop in with your question now.

Hi, guys. How's it going?

Good morning. 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? Then the second question is about sugar cane.

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 sugar cane. 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 sugar cane should be like. Just about cotton, 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. First about cotton, right?

What we noticed is we were really relying on cotton in Bahia, and and that's the first BrasilAgro photograph, right? Then 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 in 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 Chaparral 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. A view the company had And so we look at the profitability.

When you look at soy with a contribution margin at about 29% to 30%, we see cotton with a 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.

The company readjusted. We see the cotton of sequeiro, and we took all of the cotton from the off-season harvest, right, in the Xingu region, where you have challenges due to altitude, etc.

You can see day days that are maybe not that cold, right? It's really important.

You have to dosage the consumption of energy through this and when at night it's colder, the plant can breathe with greater ease, right? 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 Chaparral 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 Chaparral farm, where we had a lot of this cotton, we sold those 8,000 hectares, which is a very interesting deal for the company, right? 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 33 and 34 applications to control an insect that's really a big problem, and so it's a crop where you can't make any mistakes, and you also can't put shareholders' capital at risk.

We're directing cotton to irrigated areas here in Bahia, and together with this, we're also increasing irrigation projects. The company will continue to produce cotton in a more efficient way.

For sugar cane, what we did was the following. First, this year we'll have we had significant work done to kind of change the nutrition of it and place more fertilizers.

We had significant work to also reduce issues in the in the sugar cane plantations. Ever since the pandemic, there was these discussions on this.

That's kind of like a sector market perspective, right? There was moments where the production plants didn't even know when they're going to stop processing that because they didn't have time space to stock up alcohol, right?

At that moment, everyone kind of moved away from the renewal areas, and you carry this for 2 or 3 years for a cycle of a crop, which is a 5 5 years. Overall, us and the sector had a aging of the sugar cane plantations, and the sector still has a big challenge, which is the cost of capital.

That's pretty high, and with this, you pasture 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 sugar cane in the next harvest.

We accelerated the plantation of sugar cane in this harvest compared to others, which is the sugar cane that's going to be harvested now. This is also We're going to get back to planting this around 2,000, 2,600 hectares in this unit.

The company overall, what we're understanding in the improvement of the sugar cane 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?

You have plagues, diseases, and other issues. In sugar cane, we had more efficiency to find and control what they call the camalote grass, which is a big challenge.

Now this is really well controlled, and the areas are very clean. All of the detracting factors for productivity, we've been able to work on in and interacting in a very precise manner with telemetrics, and we've been working on improving this productivity.

When you look at the sector, what are you seeing in the sector? The overall sector is really concerned with the price of sugar cane, 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 sugar cane. The overall scenario now is going to be a harvest that's more alcohol-based, right?

In these 2 or 3 years of changes, we went from ethanol sugar cane ethanol that was 3 or 4 million tons to almost 10 or sorry, 3 or 4 million liters for sugar cane to corn ethanol. That was very different, you also pressure ethanol.

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. That'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 when it about the price of ethanol and sugar cane in the next year, but we're optimistic for sugar cane and ethanol prices in the next cycle.

Why is that? Because we know the stability of productivity in India always, and we know the cost of capital in last few years held the renewal of sugar cane plantations a lot, right?

We really believe that this will leads to some limitation of productivity. We want to be really well positioned to have productive sugar cane and working in the opposite direction, think working towards a reduction of the average age range of the plantations, right?

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 for super good pricing.

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 sugar cane. That was an important detractor as well, and considering all the dynamic you had mentioned, the icing and frosting and all of the plagues, etc.

When you look at the future with this you have for the harvest in 2026, is this 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? We're just trying to understand what's left as a space once you have this initial comment, right?

Then, André, more of a long-term question here. In Brazil, 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 it's probably going to be a limit to this, right, 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 a adjustment for the reduction of this planted area in Brazil?

If so, what would we have to see to see the scenario take place, right?

This is a farmer where we're going to have a big volume of grains, right? That should be a positive variable, right?

Especially at this moment with a worse profitability, right? What's the limit of this disruption, and what's missing for this to happen?

That's a million-dollar question, right? Then we'll talk about 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 sugar cane, 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 sugar cane is going to grow, and that's where we measure this spacing, right?

We can see this distribution that's a lot better, and we're in February. We still have 4 months basically for the growth of sugar cane, but we already see this distribution of internodes that's better.

Last year, despite having rain in the formation of grains, we had a summer that was really hot, and plants above this certain temperature, they stop and they say, "Look, that's too much. 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 sugar cane that we're not seeing this year. We did have peaks in temperature, but there weren't that many sequential days as it was last year in December, January.

These two factors for us are extremely decisive for productivity. Now what's starting to happen from March on is that we start have biometrics, and then people start coming into those points that were raised and start performing the bio-metrical analysis to understand how things are doing.

Visually, considering the extension of the internodes and also the width, the sugar cane's very different, right? These are the main tools.

Then the second question is the reduction of the margin. 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? 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, "Look, the area was being expanded."

We included a factor which is very important. The decision to open up areas for farmers in the Cerrado 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. That generated this external factor into this sector, right?

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 till 2025, the trading's saying they're not going to buy grains.

The other trading's 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 a rational factor, which is the external factor and the opening of the areas due to limitation of the trades in not buying grains from areas that are deforested or areas that were opened 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?

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 the study.

If you looked at the historical series in about 100 years of soy prices, you'll see, and I had the opportunity actually to watch this study closely, but you'll see that we have a cycle, right, of soy every 6 or 7 years. 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. Why is that?

Prices that are attractive, farmers have a contribution margin, there's a carryover, they have to perform this, and then they start expanding, right? Then when they expand the area, the prices have a retraction, and then you have the expansion of the area and this historical series.

When you see this, on the other hand, you have to consider the demand, right? What's going to happen is you're going to have restrained prices, and then the demand of soy is a little waltz, right?

Like 1.5%, 2%. You spend 3 or 4 years, and that generates a hole of 6%, 7%, 8% of the demand, and then once again you go back to increase prices, incorporating new areas in the system, etc.

We're talking about a something that's infinite, right? You would incorporate a lot of areas that are easier and more productive.

Now you incorporate more areas with greater difficulty and less productivity, right? Now we're coming into more areas, but less productive areas, right?

The other factor that I think was fundamental to incorporate the areas in Brazil in the last few years, which is mostly 60%, 65%, is mostly of them did not come from open areas we were opening up in the Cerrado. They came from incorporating pasture areas.

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, it kind of can absorb more carbon, right?

The second factor that kind of tagged in this a bit was the price of cattle, right? 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," right?

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 was always connected to the contribution margin and profitability.

In the last few years, we had external factors, and we also had this big valley, right, which was also a significant movement, right? Saying, "Look, I'm going to make 160 kg 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. That area, that's not that 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 800 and some thousand hectares of soy. This year, everyone is saying, "Look, we're not going to incorporate 800.

We're going to incorporate maybe, in our understanding, 400, 500 thousand hectares of soy." The next year, then we're going to get back to incorporating what's a basal, right?

Maybe 200, 250 thousand hectares of soy per year, and then that becomes a number that's going to be adjusting that supply and demand ratio. 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's from XP. Great, the connection is excellent.

Ana Paula owns my agenda here. 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 a land donor, right?

Of course, you still have a big potential conversion, but maybe it reduces a bit of the short-term pressure, right? 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?

Then if you think about this dynamic of price of land and so do you think this is an opportunity or maybe a risk and groups that kind of move in this direction? These are some of the aspects, right, trying to get a 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, and I remember one of your phrases on how soy has to drop 3 or 5 years to really start being priced in the market, right? We've already seen this in '23, '24, '25, and '26, 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, and it would be kind of favoring the scenario, right?

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, they're being auctioned and searching for operators, right?

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, etc., 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. 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 created 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? If you add up all the groups and states, etc., the areas incorporated in the last few years probably represent 3% or 4%, 97%, 96% come from farmers to farmers, right?

I would say that the pressure of the trade for industry and the qualified company will pressure this development. I don't think so, but if they do, I don't think that'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? I don't think there's going to be huge pressure.

I don't know if you guys had 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 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, "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 40 sacks, in 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?

I can't view that we've reduced all the pressure, and now things are going to move, right? 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, 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.

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 happening a lot at a lower level, right?

When you look at the banks recovering land, the average property of 600, 700, 800 is always coming to the market, 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 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, 2 or 3 years, right, we're in the third year, and we already start seeing this. Farms that would arrive at 600 sacks of soy, now you can buy 450.

When you consider the 450 and the cost of capital that Gabriel 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 rate. If we have a reduction of the moratorium and a lower interest rate and you have three factors that are important for this.

You have high interest rates, a positive scenario, and then you have this issue. We're definitely going to be more buyers than sellers.

All right. Thank you very much.

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.

Have a great weekend, and we'll see you in our next quarter.