Adecoagro S.A.

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to ADECO Agro's 2025 Results Conference Call. Today with us, we have Mr. Mariana Bosch, CEO, Mr. Emilio Neco, CFO, Mr. Renato Junqueira Pereira, Sugar, Ethanol and Energy VP, and Ms. Victoria Cabello, Investor Relations Officer. We would like to inform you that this event is being recorded and all participants will be in listen-on mode during the company's presentation. After the company's remarks are completed, there will be a question and answer section. At that time, further instructions will be given. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of ADECO Agro's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of ADECO Agro and could cause results to differ maturely from those expressed in such forward-looking statements. Now, I will turn the conference over to Mr. Marliano Bosch, CEO. Mr. Bosch, you may begin your conference.

Good morning and thank you for joining ADECOagro's 2025 results conference. Today we are presenting a larger, further diversified and more resilient ADECOagro, but with the same DNA, being the lowest cost producer. Upon acquiring Profertil, we became the largest producer of urea in South America, This new operation marked a transformational milestone for us as it broadened our production capabilities, more than doubled our cash generation, and reduced earnings volatility by incorporating a stable, consistent, and already cash-generating business. We are adding a unique asset in Argentina to our well-diversified agroindustrial portfolio. with the capacity to expand its earnings and cash potential by leveraging on Argentina's largest natural gas reserves. As we rely on natural gas to produce urea, greater extraction will translate into further supply at a more competitive prices. We also have a huge market opportunity of reaching a wider demand in South America that today must rely on imports from faraway origins such as the Middle East. Due to the ongoing international conflict, urea prices have peaked and we are very well positioned to capture this upside. As most of our production is still open to market prices, and our gas supply remains secure and at a fixed price. The acquisition of Profertil would not have been possible without the continued support of our shareholders. We raised $300 million in new equity, anchored by Taylor, our controlling shareholder, further reinforcing their commitment to the company's long-term strategy. Given this incorporation, we decided to simplify the way we view our businesses and move to three segments. The sugar, ethanol and energy business, the fertilizer business, and the food and agriculture business. All which Emilio will get into more details shortly. Now looking back to 2025, It was a challenging year for the agribusiness sector as commodity prices reached the low end of the cycle. Today's prices remain under pressure, but with a focus on efficiency and being the low-cost producer, we will be able to continue navigating the cycle. Higher crashing in Brazil will drive further cost dilution, which will partially mitigate the lower sugar prices. In Argentina and Uruguay, better productivity will turn into margin expansion and greater results. On top of this, we expect a normalized and full year of operations from the fertilizer business driving federal cash generation. To conclude, I would like to acknowledge all the people in ADECOagro for their hard work in this tough context, I am convinced that if we remain focused on the lowest cost producer in each of our sustainable production models, we can further expand our earnings potential. Now, I will let Emilio walk you through the numbers of the year.

Thank you, Mariano. Good morning, everyone. Before entering into the results of the year, I would like to make a preliminary observation with the intention to provide more clarity in the understanding of the numbers we are presenting today. Following the acquisition of Profertil on December 18, 2025, our consolidated interim financial statements incorporate Profertil's income statement only for a 13-day period under a new business unit named Fertilizers. Additionally, In an effort to update and simplify the way we view our business units from the beginning of January 2026, the company will change the business segment reporting structure as follows. Segment number one, sugar, ethanol and energy business, as previously known. Segment number two, the fertilizers business. This includes the manufacturing and commercialization of fertilizers, And lastly, segment number three, Food and Agriculture Business, which reflects an integrated business focused on agriculture and food production that in the past were presented through three separate verticals, crops, rice, and dairy. Please turn to page four, where you can see how the acquisition of ProFertil supports our scale. On a pro-formal annualized basis, consolidating the 2024 and 2025 results of our fertilizer business, ADECO Agro increased its size from a base of $1.5 billion in recurring revenues and a mid-cycle adjusted EBDA of more than $400 billion and cash generation of $150 million to to above the $2 billion sales threshold with the potential to generate $700 million in adjusted EBITDA and to double its cash generation. In addition, the acquisition further diversifies our portfolio, as illustrated in the coin chart at the top right, thereby strengthening the company's ability to perform across cycles. please turn to page 5 of the presentation. As we have been anticipating over the previous quarters, 2025 was a challenging year marked by lower commodity prices, mixed productivity, and higher costs in U.S. dollars, which resulted in a year-over-year decrease of 2% in sales and 38% in adjusted VTAs. On top of that, Verilizer's financial results were affected by two events which resulted in approximately 90 days of downtime. First, Profertil carried out the largest scheduled turnaround of its plant, resulting in a full shutdown of 54 days starting on October 16th and ending on December 8th, shortly before our acquisition of the company. And second, a 31-day downtime due to the flooding of a third-party gas distributor that interrupted the delivery of gas to the plant. As a result, again, on a pro forma basis, assuming full-year results of our fertilizers business for both 2025 and 2024, revenues were down 6% compared to the prior year, whereas adjusted EBTA generation declined by 35% year-over-year. We expect a full recovery in the fertilizers business adjusted to BTA as operations return to normalized levels. At Areco Agro, we have always leveraged on low-cost production and product and geographic diversification to mitigate commodity price volatility and adverse weather events to inherent risks within the agribusiness segment. With the incorporation of the fertilizer segment, we have moved to three equal-sized revenue streams and a more diversified and less volatile cash generation across our geographies and products, as shown in the pie charts at the bottom of the slide. Regarding the acquisition of Profertil, we would like to make now a brief summary. Please move to page 6 of the presentation. We closed the transaction during mid-December for a total consideration of $1 billion for the 90% equity interest. From this amount, $676 million had already been paid by December 31st, with the remaining balance to be paid in the first half of 2026. As of today, the outstanding balance is approximately $50 million that will be settled before the end of this month. The transaction was financed through a combination of cash balances in the amount of $400 million approximately, two new long-term debt facilities of $200 million each with a seven-year tenor, two-year grace period at attractive rates, and an equity issuance of $300 million marking Agro's return to the public markets since its IPO in 2011. At the same time, we continue to invest in organic growth projects throughout our operations, as outlined in the box on the right-hand side of the slide. Please direct your attention to page 7, where we present our debt profile. Our net debt and net leverage ratio increases compared to prior periods, explained mainly by the financing of the acquisition of Propertil and the lower results of the year. On a pro forma basis, net debt reached $1.5 billion, whereas our net leverage increased to 3.3 times compared to 1.2 times in 2024. Despite this, it is worth noting that the company's full capacity to repay short-term debt with its cash balance. Most of our indebtedness is in the long term, and its currency breakdown matches one of our revenues, mitigating currency risk. Going forward, we intend to reduce our leverage ratio through higher expected adjusted VDA generation, mainly from our fertilizers business, together with a revision of our capital allocation strategy. In this sense, we have reviewed our shareholder distribution program in light of our capital allocation priorities and the lower results generated. Accordingly, our Board of Directors approved the distribution of $35 million in cash dividends for 2026, subject to approval at our Annual General Shareholders Meeting. Moving to the financial and operational performance of our business units, let's start with the sugar, ethanol and energy business on slide 9. The weather during the last quarter of 2025 was characterized by above average rainfall, which reduced the amount of effective milling days and therefore limited our ability to reach a crushing volume in line with 2024. Nevertheless, the cane left-hand harvested at year-end benefited from these four favorable rains, showing excellent yields and is currently being harvested under our continuous harvest model while maximizing ethanol production. Cane productivity recovered significantly during the fourth quarter of 2025, as seen on the graph at the top left of the slide, positively impacting the mark-to-market of our biological assets on greater expected yields for the upcoming quarters. In terms of mix, we achieved a 72% ethanol mix during the quarter and a 58% mix for the full year, as ethanol prices substantially improved during the second half of 2025, becoming the product with a better margin. Although we maximize ethanol and largely increase the amount of volume sold at greater prices, annual sales remain below the prior year on lower global sugar prices and volume sold. Despite the declining milling, our cash cost, which reflects how much it costs us to produce one pound of sugar and ethylene in sugar equivalent, remain unchanged, at 12.8 cents per pound. This is explained by a more efficient upgrade of our machinery, which in turn reduced our annual maintenance capex, together with an increase in tax recovery, giving higher ethanol sales. Overall, adjusted VTA for the year ended at $292 million below 2024's performance. Looking at 2026, we foresee a low double-digit growth in our crushing volumes due to better productivity and a full year of ethanol maximization given the current price scenario. On the following page 11, we present for the first time the fertilizer's business. As previously mentioned, The acquisition was concluded in mid-December and, therefore, our financial statements only include the Profitability Income Statement for a 13-day period. For comparison purposes, we present Properties' full-year results and its main drivers. In 2025, as we described earlier today, The fertilizer plant experienced two major stoppages, resulting in 90 days of downtime, which adversely affected results. Net sales and adjusted VTA declined year over year as fewer operating days throughout the year reduced production volumes despite higher prices for both urea and ammonia. For 2026, we expect a full recovery in adjusted VDA generation, driven by normalized operations compared to the prior year, and a positive market price outlook. In the case of our farming business, now food and agricultural business, 2025 results were pressured by a combination of lower commodity prices, mainly in rice and peanuts. uneven yields, and higher costs in U.S. dollar terms. The top line of this business remained in line versus the previous year due to higher volumes sold, which, in turn, partially offset declining prices as seen on slide 13. Nevertheless, adjusted EVPA was negatively impacted by the increasing costs and uneven performance at the farm level. Looking ahead, we have implemented cost initiatives to improve margins, including a 22% reduction in total planted area through the renegotiation of our lease agreements. We have also increased the share of rice varieties due to more resilient prices, while also leveraging on our production flexibility to produce dairy products for the domestic and export market based on marginal contribution. Before concluding this presentation, I would like to share a few brief closing remarks. Over the years, Adequado has demonstrated a strong track record of delivering consistent results and generating cash flow, notwithstanding commodity price cycles and adverse weather events. With the incorporation of the fertilizer business, we have effectively doubled the size of the company, further enhanced the stability and visibility of our cash generation, and positioned ADECO Agro in a new league in terms of scale and relevance. We acquired a state-of-the-art asset and a cash-generating business with immediate earnings contribution and limited execution risk. As a result, we are today a significantly stronger and more resilient company with enhanced diversification and a more robust earnings profile. We are very enthusiastic about the company we are building and the long-term value that this transformational milestone is expected to deliver for all of our stakeholders. Thank you very much for your time. We will now open the call to questions.

Thank you. The floor is now open for questions. If you have a question, please write it down in the Q&A section or click on raise hand for audio questions. Please remember that your company's name should be visible for a question to be taken. We do ask that when you pose your question that you pick up your headset to provide optimum sound quality. Please hold while we pull for questions. Our first question comes from Guilherme Gutia with BTG Pactual. Your microphone is open.

Hi, my dear. Good morning. So, there are two questions from our side here, please. The first one is on fertilizers. So, you are now starting to operate Profertil at a time when urea prices are actually soaring. We just want to hear a review a little bit on the fertilizer market today. So how are you seeing it? If you expect these higher prices to affect the industry volumes in a meaningful way or we may actually see this price increase to maybe flow more directly to prefer to margins. So that's the first. and the second one is on the sugar and ethanol business you guys are now estimating a double digit growth in sugar can question for this crop year something that should be largely helped by agricultural yields so we just want to know how your guys seen the unitary costs going forward especially since you're going to have a higher dilution from the stronger volumes But fertilizer prices are also increasing. So those are the two ones, please.

Thank you, Guilherme, for your question. Number one, I want to take the question on the fertilizer business, and then Renato will take the specific of the sugar and ethanol. On the fertilizer business, of course, today the level of prices have increased because of the conflict, and that increases between 30% to 40%. But before that, the fertilizer prices were also good prices for us and for our business model. And today, how this higher prices on urea transform into higher margins for us, that difference goes directly to the final number, to the EBITDA number or to our cash generation, because all our costs are fixed, our gas contracts, that is 60% of the cost of producing urea, are already fixed and we have film contracts until the end of 2027. So that is pretty easy to calculate and to understand what's the impact on that increase in prices. Having said this, we produce per year or we should be producing in average 1.3 million tons per year. From these 1.3 million tons, we have already produced and saved during January and February around 200. So 1.1 are still open to this increase in prices. And we sell almost every month the amount that we are producing. There are some months that we sell some more because of the cyclical acquisition from the farmers. So during July, August, September, we sell more than during February and March. If the prices continue at this level, that 1.1 million tons that are still available for sale will be impacting directly on our final results. So that's basically how we see this. And we see fertilizers for this year at relatively high prices. We have this view that even with the conflict finalizing, price of fertilizer will be impacted for the whole year with the most probability. And then going to your second question on the sugar and ethanol business, I would like Renato to answer that question.

Hi, Guilherme. We think that our costs can be reduced in approximately 15%, between 10% and 15%. I think one of the points you just mentioned is the dilution factor. As was mentioned, we had a lot of rains in the last quarter of last year. which improved a lot the outlook for the sugarcane for this year. That's why we are having a very intense first quarter in terms of crushing, producing only ethanol at high prices. So that's the dilution factor. And then if you go to other points that impact our costs, we think that the labor should increase close to the inflation. Fertilizer, we have already fixed and bought 70% of our annual need, so we don't see impact until at least the middle of the year. And diesel, of course, depends on the increase of price of Petrobras, but we have the benefits of the increase of price of gasoline. Also, the leasing cost should be lower because of the consequent prices. And more important, we have been working a lot in adjusting our efficiencies, especially in the agriculture part. We have been very disciplined in measuring the efficiency of each machine in the field. uh so we have reduced the number of equipments uh uh to harvesting the the the sugar cane to plant the sugar cane uh so we are doing the same thing with less equipment which represent less cost so we are very optimistic we're going to have a good year in terms of of costs thank you very much guys

Our next question comes with Gabriel Barra with Seed.

Hi, Dr. Agutin. Thanks for taking my questions here. I have two. Mostly it's a kind of a follow-up from the last question. The first one is about the fertilizer business. uh when you think about this new scenario for or for real and ammonia price uh given the fact that you guys have a really interesting position in the gas price in argentina how should you think about the commercialization strategy for for the year given this much better scenario but the level of facility that you have at this point you know makes this kind of decision more than let's say challenging in this context right so i would like to understand the strategy for the year. The second point is about another commercialization strategy, but in the sugar natural, right? The same case here, right? We see a really tough situation right now for gasoline price, for diesel price in the country. We are seeing even that petrobras have not changed the gasoline price. We are seeing gasoline price increasing in the last two weeks, which means that it seems to be more supportive for ethanol price during this next crop season for gasoline. for the year. So take advantage of this kind of stronger scenario for ethanol prices. How should you think about the mix in the commercialization strategy for ethanol going forward, you know, point of view? So those are the two questions. Thank you.

Hi, Gabriel. Thank you for asking your question. Renato, do you want to answer the second question on the gasoline prices, et cetera?

Okay. So we are more optimistic about the ethanol situation now that the gasoline price will have to increase. Actually, it's already increasing. In the short term, the prices are very good because the level of inventories are very low. Actually, it's 25% lower than a year ago. That's why under our continuous harvest model, we are crushing a lot in the first quarter and only producing ethanol. So we are selling ethanol right now close to 20 cents per pound equivalent in Mato Grosso do Sul. When the season really starts, which is mid-April, we believe that the supply of ethanol will increase, something between 3 and 4 billion liters. But part of this is going to be consumed by the lower stocks that I just mentioned. The other part is going to be consumed by the fact that the E30 is going to be effective since day one, different from last year. And the other part of the volume is going to be absorbed by a higher market share of hydrous ethanol. If you consider a parity at the pump at 60%, is still an ethanol equivalent to 16.5 cents per pound in Mato Grosso do Sul, which is still better than sugar now. So that's why we think that we will be maximizing ethanol the whole year. And of course with a price better because of the situation of the gasoline that you asked.

Thank you, Renato. Gabriel, and on the fertilizer business and our strategy on commercialization, in this case, you have to take into account that we always follow international prices. South America, this region, imports 10 million tons of urea per year. And the region only produce 1.5, 1.7 million tons per year. So the net imports are huge. So always the price is determined by international prices. Having said this, most of our strategy is selling domestically within Argentina because Argentina in particular also imports half of the needs that it has per year. So our strategy is to maximize the sales within Argentina, but always pricing at half. Import parity, so that is the concept on how we price and all our strategy. And then, as we are producing every month more or less the same amount, and the needs of urea are different in the – there is a peak in May and another peak in September, October, of the need that urea needs at the fields or in the farms – a part of the commercialization strategy includes delivering into the storage capacity that is in the interior of the different places in order to have this urea ready to be used so that is basically how we move strategically on how we sell the the urea that we are producing all the year round thank you team bye please

Once again, if you have a question, please write it down in the Q&A section or click on raise hand for audio questions. Our next question comes from Isabella Simonato with Bank of America. Your microphone is open.

Thank you. Good morning. Thank you. My question is a little bit on the use of capital, right? As you said, you are much more unleveraged than a year ago and with a very different cash flow stream profile, and I understand that this higher year-over-year prices should accelerate that. So I was wondering how first we should think about CapEx for 2026 and also cash being returned to shareholders. Thank you.

Thank you, Isabella. As you know, we've been always very disciplined on this capital allocation strategy. So with the acquisition of the fertilizer business, we have higher leverage to what we have always expressed that is our ideal leverage in terms of time service so around the two is where we would like to be and where we are working to to be but having said this when there is something very specific very attractive as it was the acquisition of the fertilizer business um we get into and we can move into this level as we are today we are very confident that we are going to be able to go to the levels where we feel comfortable pretty quick and that's what we are working in but As Emilio explained, we are continuing with our dividend policy. So we are continuing distributing in cash dividend $35 million that will be distributed equally in May and November as we've been doing in the past three or four years. And also we are analyzing interesting growth opportunities or growth projects. Each one of these three lines of business have very attractive, specific growth opportunities. most of them organic growth opportunities and some of them inorganic, but we are always analyzing that, but we will continue to be very disciplined with this general concept of the capital allocation, where some is for returning to shareholders, some to continue to grow, and also to go to the levels of debt of two times or around two times, that is where we feel more comfortable.

Thank you very much.

Our next question comes from Matheus Infelt with UBS. Your microphone is open.

Hi, everyone. Thank you for the time and taking my question. My first question is sort of a follow-up for the previous question, which is I understand that the near focus is on the 11-year story, which might be relatively quick given what we're seeing in Euro-Yen ethanol prices, right? So thinking once you do the leverage in two, three years, what's the next growth avenue that you really view from here? Is it expend more sugarcane crushing? Is that a possibility? Or potentially expend more of the capacity in perpetual? And also if there could be M&A in the pipeline once leverage really drops? So that's my first question. And then the second question is, I understand that there's a change in the folding agriculture segment on how you receive the business. It's going to be, I don't know, 30% of your revenues, but a relatively small contribution to the overall business, but with a lot of complexity, I think 10 different commodities that you need to follow. So I'm just wondering, how do you think that these assets fit into a Decoragos midterm portfolio? if there are ways to potentially monetize better the asset, or if you have the appropriate skill in the farming business to really run, or if you could think of JVs or some partnerships, just on how you think that this fits into your portfolio midterm. Those are my questions. Thank you.

Thank you, Mateusz, for your question. I'm going to start for the second one and go into the first one. We feel very comfortable with the three business lines that we have today. We think that the food and agriculture business is something that has, as you mentioned, sales in that level. And we see a lot of opportunities to continue improving margins there. And when we think on the margins in terms of EBITDA there, that is directly to the cash generation. We feel very comfortable and enthusiastic on how that business is being transformed into a more cash-generating business. So we don't see nothing strategic there on a partnership or anything specific there. We continue to see a lot of advantages in the domestic consumption business, et cetera, that are improving and is working very well. There are some new products that are adding value, and that is very compelling in terms of what's going on there. But having said this, I'm going to the first part of your question on what is within the most attractive growth avenues that we are seeing today. The sugar and ethanol has always been very consistent, and we have this organic growth that we've been talking about and that we've been always analyzing, that we expect that to continue to be there as the returns or the marginal returns are continuing to be attractive. But when we explained to the market and when we were so enthusiastic on our fertilizer business, it's because we are seeing strategically in South America a huge opportunity in terms of urea production. Argentina has one of the largest gas bases in the world. and will become a very important exporter of gas so one of the big opportunities that we see is to become a larger producer of urea so of course we are analyzing that opportunity of building a new plan duplicating the plant what are the growth avenues that we are looking there on the fertilizer business These are investments that are huge in terms of the amount of capital required and are also very relevant in terms of the The engineering of that plant, the time that it takes to build it, it's a three-year project to build a plant like we have today at the minimum. And when you include everything, it's always more of four or sometimes it's a five-year project to build a plant like what we have today. That is a huge project, very relevant. We have nothing to announce today, rather than that we are very enthusiastic on analyzing deeper that project, the location, the amount of gas, and what's the exact amount of gas, et cetera, et cetera. So we can also think about this RIGI that Argentina has, this special program, with some benefits for large investments like this one. So these are the type of potential projects that could appear in the next year or so.

That's super clear. Thank you.

Our next question comes from Lucas Ferreira with JP Morgan. Your microphone is up.

Hi, guys. Two questions. On the fertilizer business, how to think about the production cost per ton over year, ammonia, this year, since last year, given the stoppage? I think not only you lost the volumes, but maybe fixed cost dilution was impacted, right? So assuming the plant's running full this year and with the gas prices you have fixed, what's the cost per ton more or less that you imagine for this business? And then in the long term, how to think about this business, right? Now we have fixed costs. Obviously, this is a great thing because prices are going up. but I could have gone the other way, right? So my question is how to think about this business? Is this a business you oversee like a very high operating leverage business? So you work with a fixed prices, that's gonna be the business model going forward or when the contracts expire, would you be more spots? Just to understand how to model this long term. And if I may on the farming business, maybe if you can quickly comment on the outlook for next season I know it's maybe too early to say, but any improvements you're seeing for the business? And I think you're being close to the administration, Argentine administration. Any views on any clue you have on if Argentina, with all the reforms passing, will be able to lower further the export taxes? How to think about that? Thank you.

Thank you, Luca, for your question. On the second question, in terms of the farming business in Argentina with this new administration, everything is improving. We are very optimistic on that, and that's why we feel comfortable with this food and agriculture business in general, being able to compete, being able to um compete domestically and in the export market also is very positive the taxes are being reduced so that is a very relevant improvement that is going on within argentina and That will certainly help this business to continue to improve, and that's why I mentioned before that we are still optimistic on this farming and agriculture business for Argentina and Uruguay in the coming future. going to the first question and regarding the fertilizer and the and the urea and how we think about the prices again this is a very long-term view this is within our dna as we were saying at the beginning We believe we are the lowest cost producers in the region of urea when we think on replacing all these imports of 10 million tons of urea that are happening every year in South America. We feel very comfortable that we are within the lowest cost producers. And we've analyzed all over the world the different plants that are producing urea, the different prices of gas, et cetera. And we are very confident of being the lowest cost producer. What is this cash cost of producing urea today with this level of 1.3 million tons to be produced in the plant? That is what we think that we can produce stabilized. is within $180, $190 per ton of urea. And as you've seen, the prices are much higher, and we don't think that that level of price is possible in order to come up with urea in this region. We are very confident to be the local producer in terms of producing urea, and that's why we get involved. We were not seeing that the price was going to be this level of price as we are today. We were always thinking on this long-term view that we have when we get involved into a business.

Perfect. And just to follow up, the 180, 190 includes SG&A as well, so it's going to be done at cost.

No, no, I'm talking about cost. I'm talking about cost. Okay.

Okay. Thank you very much.

Our next question comes from Julia Rizzo with Morgan Stanley. Your microphone is open.

Hi. Good morning. Thank you for picking up my question. I would like to hear your thoughts on what you know about the global fertilizer, especially the rare production. The dynamics within supply cuts around the key regions, close to the middle east if you know about any anything about supply cuts or supply reduction and how that can affect or last uh in the market and derivative to that is are the planting season starting on the north hemisphere especially european indians and i think less likely us do do we know if they have enough urea supplies for this season um Can you give us a sense of the supply-demand disruption that we could be seeing now in Judea given the war and the strict home-war situation?

Hi, Julia. Thank you for your question. Of course, we are following this very close. There is a lack of urea that is very relevant. 30% of what comes into South America comes from the Middle East and through the Ormond Strait. So there will be a lack of supply. And that can impact even further what has already been impacted. And also, there is time needed in order for that to reach. There are 60 days at least since you ask for the UD until it comes to be used. So, yes, it's going to be difficult to supply the whole needs for South America and for the Americas in general. The Americas are importers of urea globally.

So you're saying that it could be a supply shock, even current inventory levels in the ground. I don't know how much the industry holds inventory for the next season.

No, the inventories are very low. The inventories are very low.

In the South America, but in the North America was already enough? North Hemisphere, let's say, European.

No, the North Hemisphere is also under pressure in terms of being importers of urea. I don't remember exactly how much they import, but they import like 5 million tons. Yes.

And usually they do not have enough inventories, like a three-month, four-month inventory. I don't know what's the level of inventories in the chain, what usually works.

No, in general it's relatively low.

Okay, interesting. So, yeah, that could mean that Burea prices will stay higher for longer, right, until supply gets back on track, right? Yeah. of course we don't know but that is a clear possibility okay i i have another question on on sugar if you could help me to i would like to hear your thoughts recently we saw a decline in in the or a revision lower from the indian harvest uh we have brazil of course naturally going max ethanol we have oil prices reaching over 100 actually futures even higher uh why you think it's driven it's a it's kind of a putting up this pressure on the on the on the sugar prices compared to other commodities and even a strength in the fundamentals. And what do you see that turning?

That's a good question, Julia. We also don't clearly understand. As Renato just explained, the SUA production in Brazil, that is one of the main producers worldwide, is going to... be maximizing ethanol so we expect that to be also transferred into sugar prices in the medium term but we are not seeing that yet uh renato can you add something else to well at least i think it's exactly that once the market realized that the brazil is maximizing ethanol

is going to have less margin to switch the mix towards sugar, and then the market is going to be more balanced, and then we think there is a potential to increase the price of sugar in the second semester. And if you think in the mid-term, we think that the supply is going to decrease, because today the sugar price is below most countries' production costs, including most players in Brazil. So we think that it's going to have an impact in the supply, so price should react next year, and probably the low price is not going to last that long.

Okay, thank you.

This concludes the question and answers section. At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks.

Thank you all for participating today and we hope to see you in our next conferences.

Thank you. This concludes today's presentation. You may disconnect at this time and have a nice day.