Good morning everyone and welcome to SLC Agrícola's second quarter 2026 earnings conference call. My name is André Vasconcellos.

I am the Financial Planning and Investor Relations Manager. Joining me today are our CEO, Aurélio Pavinato, and our CFO and IRO, Ivo Brum.

It's a privilege to be with you this morning. Please note that this conference call is being recorded and will be made available on the company's IR website, where you will also find the presentation.

If you wish to listen to simultaneous translation, we have this feature available on Zoom under the globe icon labeled Interpretation that you find at the bottom center of the screen. When you select it, please choose your preferred language, Portuguese or English.

For those listening to the conference call in English, you can mute the original audio by clicking on Mute Original Audio. For the Q&A, we kindly ask you to submit your questions through the Q&A icon at the bottom of your screen.

As usual, your name will be announced so that you can ask your question live. At that point, a request to activate your microphone and camera will appear on the screen.

If you do not wish to activate your microphone and camera, please type no microphone and I will read it out loud. We would like to emphasize that the information contained in this presentation, as well as any statements made during the conference call regarding SLC Agrícola's business outlook, projections, and operational and financial targets, are based on the management's beliefs and assumptions, as well as on information currently available.

Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions as they relate to future events that may or may not occur.

Investors should understand that general economic conditions, market conditions, and other operational factors may affect SLC Agrícola's future performance, leading to results that differ materially from those expressed in such forward-looking statements. I would now like to turn the floor over to our CEO, Aurélio Pavinato, to begin the presentation.

Pavinato, please go ahead.

Good morning. Good morning, everyone.

Thank you, André. Welcome to SLC Agrícola's second quarter 2026 earnings conference call.

We appreciate the participation of our shareholders, analysts, investors, and all other participants. Let's please move to slide 4, where we'll discuss the cotton market.

The first six months of 2026 were marked by significant recovery in international cotton prices, following a long period of depressed prices. This scenario directly affected international polyester prices, which, given its competition with cotton, and given the textile industry's ability to switch between these two raw materials, helped support the appreciation of the natural fiber.

From a fundamentals standpoint, global cotton consumption for the 2026/2027 crop season is estimated at approximately 123 million bales, compared with a projected production of 117 million bales. Therefore, there is a global deficit of approximately 5.3 million bales.

Brazil is expected to continue gaining market share in the international market, consolidating its position as one of the top global players. The 2025/2026 crop year already reflects this trend, with Brazilian cotton exports registering volumes above the historical average for the period.

Now, let's move to slide 5 to talk about soybeans. Soybean prices, both on the CBOT spot market and at the Paranaguá CEPEA benchmark, have recovered significantly through 2026.

The recovery in global prices, as reflected in the CBOT benchmark, has been driven largely by the outbreak of the conflict between the United States and Iran, and the resulting rise in oil and energy prices. Against the backdrop of growing concerns related to the decarbonization of the global energy mix and the increase of use of renewable fuels in the mix, we see the correlation between soybean oil prices on the CBOT and crude oil prices strengthening.

This provides important support for soybean prices. Globally, the USDA projects a tight supply and demand balance for the 2026/2027 crop season, with the smallest surplus in the past five years.

Demand for Brazilian soybeans also remains strong, with national exports in March through—in January through March broadly in line with the volumes recorded in the same period in recent years. This confirms both robust global demand and the competitiveness of Brazilian soybeans in international markets.

It's also important to monitor potential tariffs changes imposed by the United States on its trading partners, similar to what occurred with China during Donald Trump's first presidential term. At that time, Brazilian soybean exports to China benefited relative to US exports.

Over the past few years, particularly since 2018, Brazil has established itself as a consistent supplier to the Chinese market. Let's please now advance to slide 6, where we'll talk about corn.

Corn prices in the CBOT spot contract and in the Brazilian domestic market have shown significant volatility throughout 2026. Corn prices in Brazil have found solid support from growing domestic demand, and this has been driven in turn by the expansion of the corn ethanol industry.

As a result, Brazilian exports have been facing increasing competition from the domestic market, where prices have been more attractive. Globally, the corn market is expected to remain in a deficit, with demand exceeding supply by 24 million tons.

This is the largest deficit in the past six years, according to USDA data. Meanwhile, the ongoing Russia-Ukraine conflict remains an important factor in the global corn trade, given Ukraine's position as one of the largest world exporters.

This situation remains critical for global export flows, as Argentina, Brazil, and Ukraine, together with the United States, are among the world's leading corn suppliers. Let's please now go to slide 8, where we'll discuss the status of the 2025/2026 crop season.

We have completed the soybean harvest with a record average yield of 4,146 kg per hectare. This performance is 4.7% higher than the previous cycle and 2.7% above our initial projections.

More important than the record itself is the fact that this result was achieved while expanding the soybean acreage. This demonstrates the efficiency of our operations and the benefits of our investments over the past few years.

As a result, we have achieved a yield approximately 12% higher than the national average. We have now harvested 62% of our cotton crop, and the outlook remains very positive.

We expect one of the best cotton crops in the company's history, with yields approximately 12% higher than last year's crop season, reflecting the strong crop development we have seen so far. For second-crop corn, we have now harvested 90% of the crop.

The crop faced weather-related challenges due to delayed planting and uneven rainfall, particularly in Maranhão and the Araguaia Valley in Mato Grosso. Even so, we continue to expect yields of approximately 6,798 kg per hectare, demonstrating the resilience of our operations in spite of less than favorable conditions.

Let's move now to slide 9 for an update on our hedge position for the 2025/2026 crop season. We continue to maintain a high level of hedging for the 2025/2026 crop.

We have already hedged 90% of our soybean, 94% of our cotton, and 54% of our corn. This increases revenue visibility and reduces our exposure to price and market volatility.

I will now give the floor to my colleague Ivo Brum for a few comments on our financial performance. Ivo, please proceed.

Thank you, Pavinato. Let's please move to slide 11, where we share some highlights from our income statement.

Net revenue for the semester reached a record R$4.4 billion, up 6% year-over-year. This performance was driven mainly by higher volumes of cotton, soybeans, corn, and cattle being sold.

Gross profit reached R$1.9 billion, an 8.8% increase, mainly reflecting improved operating performance in cotton and corn. Adjusted EBITDA totaled R$1.3 billion in the first half, 15% from first half '25, mainly reflecting lower gross profit from soybeans and cottonseed.

In addition, selling and administrative expenses increased. Now let's move to slide 12, where we have a summary on our CapEx for the quarter.

During the first half of the year, we continued to execute our investment plan to expand production capacity and strengthen operational resilience. We invested R$155 million in irrigation, one of our key levers to mitigate weather-related risks, improve stability in production, and support productivity gains.

Following the end of the quarter, we announced the acquisition of 8.9 thousand hectares of arable land from Grupo Radar. We also renewed leases covering 8.7 thousand hectares with the new tenants, ensuring that we can continue to operate this land.

As a result, 5.3 thousand are leased through the 2029/2030 crop, and around 1,000 hectares are leased through 2026/2027. The remaining 2.5 thousand hectares have been re-leased for an additional 15 years starting with the expiration of the current lease at the end of 2026/2027 crop, at a cost of 19.5 sacks per hectare.

We have also opened a new cotton gin at Fazenda Parnaíba. These initiatives expand our operational and industrial capacity.

Now on slide 13, we discuss our debt position. Regarding our capital structure, adjusted net debt ended the quarter at R$7.5 billion, while leverage stood at 3.09 times adjusted EBITDA.

This increase reflects our operational growth, higher working capital requirements, and the investments made in the period. Despite the increase in net debt, which of course reflects our expansion, we maintain a solid capital structure and a balanced debt profile.

We have paid off most of the costs associated with the 2025/2026 crop, and 78% of our debt was classified as long-term, similarly to 2025. This reflects our discipline and financial management, and our focus on maintaining a capital structure that supports sustainable growth.

Now turning to slide 14, we will give you an assessment of our land portfolio. We have completed the re-evaluation of the company's land portfolio.

Our own property, together with those held through private equity partnerships, were valued at R$13.5 billion, reflecting the continued appreciation in the average price of land per hectare over the past five years. The assets have appreciated 8.4%.

At the end of June 2026, net asset value stood at R$27.12 per share, representing a significant discount to the company's market value. Continuing the presentation, I will now turn the floor over to Pavinato to discuss the outlook for the 2026/2027 crop.

Let's move now to slide 16 for an update on fertilizer purchases. As we move through the current crop season, we continue to make progress in planning for the 2026/2027 crop.

We have already secured 100% of our phosphate requirements, 90% of our potassium chloride, 70% of our nitrogen fertilizer needs, and 96% of our crop protection. On slide 17, we discuss our hedging for the 2026/2027 crop.

We have continued to manage our risks carefully, increasing our hedge positions for the next crop, always protecting margins and reducing our exposure to market volatility. Our current hedge position covers 49.2% of soybeans and 55% of cotton, including committed volumes.

Now, finally, let's move to slide 19, where we discuss some ESG highlights and awards. For the fifth consecutive year, we have been recognized among the best companies in Brazil in Exame's Melhores do ESG awards, further strengthening our track record in ESG.

We have also identified five farms with a negative carbon balance, showing that productivity and sustainability can walk hand in hand. Finally, we have ranked 15th in the 2026 Great Place to Work agriculture ranking, improving from the place we had in 2025, which was the 19th.

Now we are ranking 15th among agribusiness companies. We thank you all for watching, and we will now open the Q&A session.

André?

Thank you. We will now begin the Q&A session.

To ask a question, please submit it through the Q&A icon at the bottom of your screen. As usual, your name will be announced so that you can ask your question live, and at that point, a prompt to activate your microphone and camera will appear on the screen.

If you do not wish to open your microphone and camera, please type no microphone, camera at the end of your question. Our first question comes from Gabriel Barra, Citi.

Gabriel, could you please activate your camera and audio? Gabriel, are you with us?

Hello, can you all hear me?

Yes, we hear you fine.

Good morning. Good morning, Ivo.

Thank you very much for taking my questions. There are two things.

I think that when you're talking about agriculture, I think that this question is something that you cannot walk away from. We see a very challenging climate scenario.

Several companies are preparing for a more challenging climate scenario. I would like to know what measures have you been discussing to overcome any risks?

I think that, for example, your investment in irrigation is a sign of future planning, but are you thinking of doing something more specific in the second half, especially in relation to the next crop season? How are you going to protect against this uncertain scenario?

Now, we see now that the company is at a higher leverage level, even in comparison with the previous year, you're 0.7 points higher than last year. Ivo made reference to the investments you made and the current working capital requirements, but this is a level that makes us a little more uncomfortable considering also the interest rates.

Could you give us your perception on the current leverage? In your vision, what should be the leverage by the end of the year?

Is this a reason for discomfort, in your view, that could lead you to take any measures to reduce the leverage and also face the higher interest rates that are expected for next year?

Gabriel, 50 questions, as always! I'll answer the question about El Niño, and then Ivo will talk about the financial indicators and leverage.

El Niño is something we're not facing for the first time, and we know that there is an effect in our operations. This year we have the forecast of very strong El Niño, and this of course causes the concentration of rainfall in the south of Brazil and more drought in the center-north.

We're preparing for it. What could be done to mitigate any damage caused by El Niño?

The damage be greater or lesser. We've had some El Niño years with very little damage.

In Mato Grosso, it will rain less, and in Mato Grosso it always rains too much. It doesn't mean that we're going to have a drought.

Now, in Bahia, it doesn't really rain too much, those are the two two extremes: Mato Grosso, Bahia. We also have Mato Grosso do Sul, which is usually not affected by El Niño, and Maranhão as well, even though the Northeast in general is affected.

We have shorter Indian summers in Maranhão. At any rate, we could have some droughts.

What could be done in terms of mitigation? Just to give you an example of what we're doing today, increasing soil coverage or also avoiding turning of the soil is something that we could do because this, of course, this leads to loss of moisture that could affect germination.

We changed our management to maintain more moisture in the soil. We've been investing greatly in soil coverage.

Our system has a much higher capacity of water retention in the soil than in the past. Also, the planting window requires adjustments.

In Bahia, we plant cotton in December. This year, we have to plant sooner, because if there is a shortage of rainfall, the crop will have developed enough to avoid greater damage.

We'll adjust the planting windows also to mitigate the effect of an Indian summer in the middle of the cycle that could lead to crop failure. Moreover, adjustment in inputs: am I going to use up all of my potassium in the first application?

No, I will do it in two parts. The same with nitrogen.

Usually, we apply in cotton three times, we'll make adjustments depending on crop development. It's a strategy to retain moisture and to reduce costs.

This is what we can do, and of course, making the most of whatever rainfall there is and always following the weather forecasts to avoid greater losses. This is what we'll do to reduce any damage that might occur.

By the way, Pavinato, maybe you could talk about our area distribution?

Yes, yes. If we compare the situation to 2016, where we had losses of 20% of our output, we saved 5%, in the end we had losses of 15%.

In 2016, we had a much greater concentration in the Northeast than in the Southwest, and we had more immature land from Cerrado to planted areas in a range from 10 to 25%. Now, we have 100% of these areas as mature land, the system is far more resilient.

In 2016, some crop areas in Bahia were producing 45 sacks of soybeans, and young areas produced 10 or 12 sacks of soybeans. This is of course shows the magnitude of difference.

In 2016, there was almost no irrigation installed in Bahia. Now, with the project we're completing at Piratini, we have 25,000 hectares under irrigation in the farms where risks were higher.

The 25,000 hectares, since we have two crops a year, this represents 50,000 hectares. Bahia and Goiás, this is where we have most of the irrigation that was nonexistent in 2016.

In a similar damage scenario, we expect that the losses in '27 should be much lower than they were in 2016. Barra, about leverage.

At the time of acquisition of Sierentz, we knew that we would see a pressure on our working capital requirements. We pay off most of the suppliers in the first half of the year.

Having a net debt over EBITDA ratio of 3 times, this is no surprise to us. Now, at the end of the cotton harvest and corn, and with deliveries in the second half, and also with the conclusion of the soybean harvest, we believe that there will be a significant leverage Actually, we are wondering whether we need to get more leverage to pay off the land that we acquired in June.

Of course, we still are pending payment, because this is a period of very high cash generation. The trend is downward on the net debt over EBITDA ratio.

If we want to step up our deleveraging, we also have the opportunity of selling, but we would like to do this without leaseback, because we know the areas, we know about the potential of these areas. It would be not good for us to lose an area that's already in operation.

This is something we commented on our last communication. We might sell, but without leaseback.

Of course, firstly, we have to find the right buyer. A leverage of 3 times makes us slightly uncomfortable, but it was already in planning.

Thank you, Barra. Our next question, Mr.

Guilherme Palhares, could you please ask your question and activate your camera and microphone? Palhares, are you with us?

Hello, good morning, Pavinato, Ivo, and André. My apologies.

Congratulations, Pavinato, 33 33 years with the company. I would like to hear your thoughts on two two points.

The timing for fertilizer purchases, you made a large nitrogen purchase. I think that you did it right on time, urea and nitrogen in general.

You had a window of opportunity, and you seized it. I would like to hear a little bit of a follow-up about your debt amortization schedule.

Do you think there's anything that you can do in that sense, because there's a concentration of payments in 2026/2027?

Thank you very much, Guilherme, for your question. Fertilizer purchases: yes, we got the timing right.

We had already purchased all of the phosphorus before the outbreak of the war, and phosphorus is what is really going through a structural cost change. In fact, and with potassium, potassium was not deeply affected by the conflict.

We had already purchased it on the early days of the conflict, and this combination of phosphorus and potassium, we were able to buy with a reduction of 4% in dollar prices. Once again, we got the right time in our purchase of nitrogen.

We bought 70% of our volume at the trough of the curve, then it went up again, it's going down again. We still have 30% to buy, something that we'll only use next year.

We were able to form our prices at adequate levels for the next crop season. We don't run the risk of witnessing a very expressive cost increase for the next crop year.

We believe that with the increases in prices in the international market, we believe that prices actually will outpace the increase in costs.

About the debt amortization schedule. Every year we pay off between 1.2 and 1.3 billion for the crop year expenses.

Of course, we are trying to lengthen our debt profile, and also we don't see a reversal of the trend of interest rates in the near term. Now we're a little bit more optimistic, we're thinking of taking some loans in dollars to lengthen our debt profile, because in dollars the interest rates are around 6% to 7% a year.

With this, you could pay off the interest rates, and you leave the bulk to pay at the amortization. Debt renegotiation is something that's very commonplace, since our debt is financed by the crop, of course.

This is the only difference.

Pavinato, just going back to something you said, and also thinking of the response you gave to Barra, in a high-cost scenario, not everybody has been making purchases of fertilizers as well as you have. Maybe this will have an impact because there's a climate risk and inflation.

When you think of your hedging strategy, are you thinking of underutilizing inputs? This could lead to lower yields, perhaps?

No, we are using the maximum economic efficiency, which is not the same as the highest agricultural yield rates. We always take the economic factors into account.

We are not reducing the use of fertilizer in the next crop season. Of course, there are some one-off adjustments that we make depending on soil fertility, but as I said, we'll only stop applying fertilizer if there's no water, right, because this would be an expense with no return on investment.

It's going to depend on the drought. If there's rain enough for plants to develop, then we're going to fertilize the areas as we usually do.

Thank you.

Thank you, Palhares. Our next question is from Mr.

Leonardo Alencar, XP. Alencar, please activate your camera and microphone.

Good morning, André. Good morning, Pavinato.

I have two questions, if I may. There was some expectation about B16, that there would be an increase in August instead of April, and now we hear that this could happen only in August 2027.

We don't really know. This frustration, do you think that this is causing an impact in terms of the premiums and exports?

How does it affect you in relation to biodiesel? A question to Pavinato: there was a change in the cotton curve recently, and also following the war dynamic, that it didn't go back to the same level, now cotton has accelerated a little bit more, and we see this more in the short term.

The curve is not really adjusting, and when we think of your models and we see how it's going, it's an impact. I would like to hear what you expect for the cotton market more in the long term.

Thank you. Soy soybean demand for biofuels.

Since oil is more expensive now, this favors biodiesel. This is something that is very positive, in fact.

Even if we maintain B15 today, we see a a very consistent demand for soybeans. Prices in Mato Grosso are now disconnected from the export prices.

We we have domestic prices higher than export prices. We had a, prices are now more in parity in the Northeast, where they don't have a biodiesel industry yet.

There is a a strong demand in corn, in soybean, even with the the massive crop that we have, and of course this is one of the one of the top areas of demand. For B16 and B17, this strengthens the demand in, the domestic market, and this favors liquidity and also creates premium a premium in prices.

Now in cotton, we see a connection to geopolitics and war. Polyester prices were at $0.40, now it's at $0.50.

Polyester is the top competitor for cotton, and the fiber that grows the most in the world is polyester because it's cheaper. The fact that polyester has appreciated is something that supports cotton prices.

This is a very important a important driver, with the with the conflict. Cotton is favored.

Then we have the the market. In the United States, the crop is smaller; in India as well; in Australia, they don't want to plant it anymore because there is no water.

The El Niño is actually positive for us. Australia had planted 650,000 hectares of cotton, and now in March and April, April, they harvested 470,000 hectares of hectare, and next cycle they will probably reduce this to 225,000 hectares, because only if their reservoirs are full, they will plant cotton.

This is what we saw in April in Australia. This is the consequence of El Niño.

El Niño is driving a reduction of area in Australia. Therefore, this is a scenario in which we well, production of cotton is not meeting the demand, so that's why our prices are supported.

We I think that the critical times in terms of pricing of cotton are now behind us, and we are at a level that remunerates Brazilian growers better. For American growers, the the current price of cotton does not really remunerate them.

They have a a cost of around 82 cents per pound. That's why Brazil is gaining share.

The world demand for cotton has remained stable at around 125 million bales, and Brazil has increased exports, and now India has become, a very important client. India, China—China is a major client, sometimes, they import more or less depending on the year, and now India will become an important client because there is growing demand for food, for and, and they will be planting more food-related crops than than cotton.

This is our market outlook. I think that, we the the valley or the trough is behind us, and of course geopolitics affect cotton greatly.

Thank you very much for your answer, Pavinato.

Thank you, Leonardo. Our next question is from Lucas Ferreira, JPMorgan.

Lucas, could you please activate your camera and microphone?

Hello, good morning. My question is about capital allocation in '27.

You are expecting better margins for next year, probably leverage will reach the peak. Do you have any idea about CapEx for next year?

Can you share this with us? Secondly, well, if we imagine the El Niño's impact will be not quite as relevant, do you think that it's the time to go back to acquisitions?

Maybe there will be assets up for sale, even thinking of the Radar group. I'm not sure if there are any other assets for sale.

I'm just trying to understand if this is a year, next year, for reducing leverage, if you have a target, or if you're going to keep an eye on the opportunities that emerge.

Leverage: something we won't give up on is our investments in irrigation. We'll start the irrigation installation for Paladino.

Piratini is concluding, and then we'll start with Paladino. We'll have the licenses, and this is already planned.

Then, of course, we'll have maintenance CapEx. We are not planning major investments for next year, except for irrigation and crop protection and fertilizer.

Of course, because there could be growth, as I said, if we have a transaction without any leaseback, then of course we could grow again. It all depends on what we see in the coming months, but basically we have all the way to March or April next year to define our growth, because then we'll start working on the next crop seasons, 2028/2029.

Thank you very much. Oh, let me go back to one point about the acquisitions in relation to Radar group.

We have to wait and see whether they'll have their assets up for sale again. I think that what I heard in the market that they wanted to reach around 10 billion.

I think that they raised a lot of funding, but maybe they want to sell more areas, but maybe there aren't that many buyers available. They can give a discount, but so it's going to take a lot of negotiation.

Our leases are ensured until '29 in Maranhão, we still have a lot of time to exercise our preference rights, if needed.

Thank you very much, Ivo.

Thank you, Lucas. Our next question is from Mr.

Henrique Brustolin, Bradesco. Henrique, please go ahead and activate your camera.

Good morning, Pavinato, Ivo, and André. Thank you very much.

It's great to talk to you. I have two questions.

Firstly about yields, the yields you delivered in the previous crop year, especially in soybeans and cotton. There's always something different, but did you see anything that you weren't expecting that led to this yield levels, or is this something in your trending curve, just to know exactly if the investments you have made paid off and comparing this to what was delivered in the 2025/2026 season?

Then I have a question about SG&A. We saw a heavier freight line.

Was that a one-off thing because of unit prices or because of the mix of crops, or do you think that this is a cost that will remain because of more CIF soybean shipments, just to try to understand?

I'll talk about the productivity first. We have, of course, made our projects based on the trending line, and our trending line has been growing consistently.

You asked about the maximum potential, and today, analyzing the market scenario and the new varieties and management, I think that we're really seeing a growth instead of decrease. It's only normal that you where climate is good to be above the trending line.

When there are some losses, you are right on the curve, and when there are climate-related losses, you remain below the trend line. What is positive is that we see a greater potential in the crops and the different varieties, we're really optimistic that our yields will continue to increase.

Soybeans, for example: so we harvested 69 bags, but we made much more, but then we had excessive rainfall and we had some losses during the harvest season. The potential is actually greater than what we harvested this year.

In cotton as well, we had some farms producing as expected, and others with more potential with the yields going up. We expect that in coming years, we'll continue to expand our yields.

Even more importantly, we'll be really setting ourselves apart from the international competition. We know how much the Argentinians produce, how much Australians—I think that Australian cotton is an example for us, because they really made great progress in yields, and that's why we have this idea that in cotton we can even have higher yields.

Henrique,

I think that really it's important to remember the geopolitical issues. Transport costs increase, international logistics had impacts because of diesel costs and insurance.

Sierentz adopted the CIF methodology. It's something that we're still learning how to use because they had some gains to be obtained, maybe we'll incorporate this as a best practice.

This is what we saw in sales. Also, we've talked about this many times, the cost of eucalyptus as biomass.

We see this also as a cost is increasing. The demand for ethanol in Mato Grosso also expands the demand for this biomass in the state and in other states.

We are now planting more eucalyptus as a protection, but in some farms this increases costs. This was a year in which we had to pay non-recurring items.

We had, for example, the payment for BTG and Pátria because of the transaction with the BTG funds, and in the first half there were discussions relating to the purchase of the farm in June, but we've been in negotiation since March, this of course created an impact. We also incorporated the Sierentz team, and this also increased our SG&A.

Of course we expect positive gains with all of this coming in. Along the cycle, we had to discontinue the Sierentz operations and implement our own system.

Up to the time, they were different systems, and gradually this will lead to a cost reduction. We reached a good level, but we see more opportunities for cost reduction in the near future.

Thank you very much, very clear.

Thank you, Henrique. Our next question is from Mr.

Matheus Enfeldt, UBS. You can ask your question.

Hello, Pavinato and Ivo. Thank you very much for your time.

I have three items to follow up on. We were talking about the climate scenario and consultancies are debating whether the area in Brazil will grow.

This is my first question. Then about cotton, Léo asked a very interesting question, I'll try to look at the short term.

Cotton above 80, are you planning to increase cotton in your mix and to go back to planting cotton in the areas that didn't make sense economically in the past? Also, when you think of your property, plant, and equipment, it's around R$900 million, and you had been saying that CapEx would be closer to 1 billion.

I would like to know if there was some carryover from last year to this year, or I'm trying to understand the impact in cash and investment in 2026.

Matheus, our maintenance CapEx is around R$700 million. Then comes irrigation, which is an additional CapEx related to growth.

We reached R$700 million. We have investments to make, maintenance is not over, and irrigation is almost fully completed.

This is our scenario. That irrigation costs R$25,000 per hectare, so as you allocate your capital and the pivots are installed, the irrigation begins and we close the cycle.

It's really within plan. We don't have much to spend on the second half of the year, in fact.

Basically the investments needed in relation to Sierentz, we needed to increase the machinery for planting, but there was no need to increase capacity.

The second half will be basically a semester for investing in irrigation infrastructure. About the soybean area in Brazil, we believe that the estimated area will be stable.

Perhaps for the first time in the last decade, there will be no expansion in the soybean acreage in Brazil. This is highly positive for prices, because if Brazil is not expanding, the supply and demand is balanced.

Demand grows every year, and the United States has planted the max they could this year. What's going to happen with corn?

In corn, we see a a growing trend because corn inventories have never been as low as they are now, only 20%, only, when usually there's at least 27%. The top crops: soybean, soybean, cotton, corn, and wheat, all of them are reducing their inventories.

Why? Because international prices did not really incentive expansion, and since demand grows every year, especially in soybean and corn, that's why the carryover stocks of corn are so low, especially with the drought in Europe.

We saw corn prices really spiraling. We believe that, we've been through the trough of commodity prices, and even with the recovery of of 10% to 15%, since costs grew significantly, well, thinking of the inflation in the United States, the baseline 2020 before the the pandemic, well, the increase was 28% in the past six years.

That was the increase in the United States, and this this is a structural change in production costs. That's why even with Chicago at $11 a bushel and corn at 4.5, this is not enough to drive expansion.

Our perspective is that we are past the trough, and in Brazil this is this is a when I look to the market, what we see that growers are are going through this period where we we went through '24, '25, '26, and in the case of SLC, what sustain our profitability is the efficiency in our operations. The yields we saw this year in in soybean and cotton, this is what we are this is what's maintaining us in the right profitability levels in '27.

For us, with the costs we formed for 2027, we expect to improve margins in 2027. Agribusiness, well, in agribusiness, '26 is worse than '25, and what about '26?

Better or worse than '27? I think that '27 will be worse, unless there is, a boom in commodities with the current prices.

When you think of the fertilizer prices in the first half last year, and if you compare it to this first half, 20% more. In thesis, the fertilizer contribution to costs will be 20% higher.

When I make a comparison with the historical prices, we see fertilizers 40% more expensive, if you discount any outliers, any outlier years. There is there's, growers' margins are under pressure, and this does not encourage expansion.

That's why, it's getting tighter in terms of supply in corn, in cotton, even rice, where we don't see, growth in demand, and in the specific case of cotton as well. The fact that soybean acreage will not expand this year indicates well, it actually leads to an expectation of price adjustments with the better remuneration of growers.

Imagine, for example, in in 2027, then in 2027 there will be a reduce reduction in acreage, and what should we do? That's why we believe that the the low period in prices is past us.

In Brazil, we are not really reaping the results because there was an appreciation of the FX that ended up eating up part of the of the returns. This is why, the appreciation of the commodities was, not as high.

Now, cotton once again has better better yields, and if you look at our history, we always conduct an assessment farm by farm to see what will give us better returns, and we're doing this also in the next crop year. We'll be announcing this in October with probably some adjustments, for cotton the more you plant on the second crop season, the better, and because you'll have then soybean and corn as the second crop.

Thank you very much.

Thank you, Matheus. Our next question is from Mr.

Gustavo Troyano, Itaú. Please go ahead, sir.

Hello, can you hear me? Thank you very much for taking my question.

Let's go back, please, to leverage. I would like to talk about the sale-leaseback.

Can you share your views of potential sales-leasebacks in a comparison between owned areas and leased areas in your portfolio? We believe that you are moving towards a more asset-light scenario.

This is not a linear process, because sometimes good opportunities appear, but I would like to know, do you have a target in relation to this mix? Even more importantly, how flexible are you in relation to this target, considering that this should be also something relating to your capital structure?

Would you be willing to adjust your target if there is an appetite, if there are buyers, would you be willing to accelerate the process? What is the target, and what's the range in this target?

We want to work with 1/3 of own areas and 2/3 leased areas. Along the process, there could be some oscillations.

We could end up buying some areas that are not part of the strategy. Buying and selling, well, we could buy and also lease back.

Depending on the farm and how much return it could give us, maybe we couldn't lease back. Our strategy is to grow our operations and avoid allocating so much capital in the land, because the return is low in the short term.

At the same time, we have different farms, we have farms with a better return on investments. We try to protect the assets with higher return on investment, and in Mato Grosso, just the purchase of the land pays off, in the short term it is something that is expensive, but in the long term it pays for itself and will be well-positioned.

The return, of course, is in a period of 10 to 12 years. We haven't changed our strategy, obviously, and the market opportunities and market fluctuations has to be managed.

That's why we accepted higher leverage. Our goal is always to be below 2 times in leverage, but maybe one day we'll have a lower share of own land, less than 25%, depending on the growth of our leased area, maybe we could have a lower percentage, and always with the focus on efficiency in operations and in allocation.

Thank you very much, very clear.

Thank you, Gustavo. The earnings video conference call is now closed.

The Investor Relations department is at your service to answer any questions. Thank you very much for participating and have a great day, everyone.