BrasilAgro – Companhia Brasileira de Propriedades Agrícolas (LND) Q3 2023 Earnings Call Transcript
BrasilAgro – Companhia Brasileira de Propriedades Agrícolas (NYSE:LND) Q3 2023 Earnings Conference Call May 10, 2023 1:00 PM ET
Ana Ribeiro – Head, Investor Relations
André Guillaumon – Chief Executive Officer
Gustavo Javier Lopez – Chief Financial Officer
Conference Call Participants
Pedro Fonseca – XP
Henrique Brustolin – BTG
Good afternoon. We are here for our conference call for the earnings of BrasilAgro. We will be talking about nine months that ended on March 31st, representing Q3 of the year that ends on June 30. And I am here with our CEO, André Guillaumon; and our CFO, Gustavo Javier Lopez.
And the announcements, if you wish to ask questions, please click on chat. If you want to send questions in writing, you can send through the platform. We are all connected. For those who are hearing us in English, the presentation is available in the chat in the English version.
Once again, thank you for participating and I will pass the floor to André to begin to talk about what happened in this quarter. Thank you. Okay, André, you have the floor.
Thank you, Ana. Good afternoon. Once again, a great pleasure to be with you and share with you this — it’s always complex to understand an agro company every quarter. It’s good to see the whole year. But, yes, we have the quarterly calls.
We will talk about what happened in the quarter, how the company is evolving in terms of operations, people development, all the points we have been talking about and to leave a lot of time for questions.
So let’s go on to the first page. First nine months, net revenue, R$663 million, R$25 million in net profit, adjusted EBITDA, R$168 million, operational revenue in here the harvest, practically 100% of soybean in Brazil, we have some 203,000 tons in Brazil, Paraguay and Bolivia.
And although it’s in the beginning of April, we did an important sale of farms, the remaining part of Araucária Farm and this when we show the numbers, you will see this in the annual numbers and this will certainly place the company having expressive excellent results.
Going on to the next page, a little more color on this topic. Well, just a little more detail. Here, we have two sales. We sold the remaining part and I’d like to explain why such a great difference in price. One of these is a lower area with a lot of sand, which had sugarcane and you have also the areas that are mixed, intermediate and lower areas.
So to try to monetize, we sold the remaining part of Araucária Farm. These two areas, the most expressive one is sale to. One is a lowland area, 300 bags in this low area, where you can use it for pasture or sugarcane, but you have more risk to produce grain.
And the other area, there we have some areas that we calculated at 1,300 bags per hectare areas at 300. So the 790 is a mix of the 3,796 hectares. We had these three types of soil and it has a different price. We got to 790 bags per hectare of the total 1,600 were low lands.
And the graph on the right, the first sale we show the recurring results, a transaction that a purchase that began in 2006 and we are divesting the last part in 2023 and during these 16 years, we had a return rate of almost 14% in the lowlands and 15% in the farm as a whole. So very expressive and shows the capacity we have to join operational results with sale of farms.
Well, here on the right we have a summary. So we sell the farm in parts, and here, we can give you a vision of the whole thing. This farm was acquired in the past, as I said, I said 2006 — actually was in 2007 — April 2007.
And this farm was acquired for approximately less than R$76 million. This includes CapEx and you — all those who follow us know this, it was bought for R$76 million. So in our books, it’s at R$76 million acquisition value plus CapEx of transformation.
So a small area was transformed. Most of the area was already transformed, but 1,068 hectares were transformed, they were upgraded and we made sales. We began to sell in May 2023, then a sale in June 2014, March 2017, May 2017 and May 2018, April 2023, the last Tuesday, April 2023. So in total, R$602 million.
When we were talking about nominal value and we are talking about acquisition plus CapEx and this was a farm that generated cash — positive cash during the years. So it’s not a simple calculation, R$602 million minus R$76 million, because we had many years of positive flow, which are reflected in the return rate. They are not reflected in total value generation, which is R$602 million to R$76 million.
And this shows once again the capacity of our company to serve on times with good prices. The second sale and the first sale where sales, if you notice, we have in a certain way, put pressure and the great difficulty of Gustavo explaining, because last year was different from this year.
We wanted to sell well, but also shorten the payment terms why? You know very well. We had a price of soybean that was very high and in the future we know prices of soybean are dropping. So we wanted to shorten the payment terms to capture the better prices in what we were paid and also receive the money in the short-term.
Next slide. Here, we always tell you about investments where investor’s money is being placed, where we are taking the company and here we have some projects that are structural projects. So there are structural changes.
The adoption of connectivity, what this can represent connectivity in the Brazilian GDP and we have to be part of this. We have connectivity projects being implemented in some units. A project that is a large operation.
We are changing, we have an ERP, which supports the company SAP and we are substituting the vertical that supported the agricultural part. So this was implemented in many units. We have this pie chart showing the status of the projects, connectivity, the progress and also field monitoring.
Infrastructure is something that we presented in the beginning of the year. We are building a seed production plant where — this is focused on seeds for our own consumption, soybean seeds. No one thought of this because it represented a very small part of the cost and with biotechnology, the seeds now have a higher cost. So also corn which was already high.
So once again the company focused on this. We were producing seeds in a simpler way. So now we are doing this professionally, modern plant for seed production and this will allow the company to have a lower cost for seeds with better standardization.
Irrigation, we have focused a lot, especially in the state of Bahia in Sao Jose, we are spending a lot to increase the yields both in sugarcane in Sao Jose Farm. Also line pressurizing, more pivots that are arriving are being erected, assembled and also irrigation projects in the units in Bahia. In Arrojadinho and Rio do Meio these are projects that are making a lot of progress.
And the last area, area transformation, three areas that were included in our portfolio. Panamby Farm part was planted, but very small due to the time when we received, when we prepared the team, they planted a small area and in the next harvest, it will be total operation, 5,000 — almost 5,700 hectares.
[Inaudible] to farm state. They planted this year a smaller area and now in the next they will reach 100% of the farm. And Fazenda Sao Domingos, that we did not plan this year and this farm, as you remember, when we announced will be included in two steps, half this year, we should include 3,000 hectares and the rest in the next harvest.
In total, in the company, another 15,000 hectares in production, 15,000 addition, 15,000 in the state of Mato Grosso. So just showing you those who are here for a longer time, see how much we suffered. We suffered this year too in two units in the state of Bahia and so we are preparing the company to have to be able to absorb in a better way the impacts and the diversity of crops and regions.
The next slide, a lot of people here are better than us to evaluate this. Here we see the curve getting to 138. Here, the highlight, Gustavo will show the company’s numbers in this harvest. We are closing at R$150 million soybean and our budget was R$157 million and this is a medium- and long-term vision.
Corn also a dropped. Cotton, we had a small improvement. Cattle raising, very well we have a great restriction in the consumption inside Brazil. This doesn’t help the price. Ethanol, good news, also we — in ethanol and alcohol we have seen an improvement. So this shows the scenario of the commodities.
The prices have dropped. On the next slide, there is a scenario of commodities dropping — price dropping in the last harvest. It was the idea. We planted with a low cost and sold at a high price. Here, all of Brazil planted with high costs and those who sold very little, sold well and now the rest. For example, we sold a lot in soybean, but we are seeing in the next year a drop in prices.
So the first graph. These peaks that you see, this was during the war, but we saw an increase with the effects, restrictions in imports. So we see the peak during the war, $1,325. Last year, this harvest that we are reporting the results was planted with $925 per ton and now we see a MAP around $580 per ton, $600 per ton.
So I made a quick calculation if you consider not the peak $1,325, but if you look at what we bought $955 with the price today $580, you have savings of $375 per ton in cost. If we consider the MAP, we use 200 kilograms per hectare. We are talking about 375 times $0.275. If we consider also an exchange rate of R$5 to a dollar, savings in MAP or a reduction of R$380 in phosphate fertilizer, the drop in costs and you can make this calculation for the rest.
On the right, we have the status of purchase of fertilizer. When we look at the bottom, we see the — we see urea and chloride. A lot of what we will report, you will see as sugarcane had a great impact on us and sugarcane has a stronger impact, it has a greater volatility in cost.
When we talk about soybean, we are talking about 190 kilograms of MAP. In sugarcane, it’s more than 500 kilograms per hectare, 600 kilograms per hectare. So the impact of fertilizer on sugarcane.
Cotton too, same thing in cotton. The impact is even higher than soybean. So sugarcane, cotton and corn greater — there’s a greater impact from fertilizers. So this drop will be expressive for these three products that I mentioned, the cost reduction.
The graph on the right, here we see the status of purchase. We have advanced in our purchases when we — so we have — we bought little, we closed some, but the others we waited. We have accessors that give us information about fertilizer. There are people looking at this all the time and we knew that this would happen. The drop in costs. So we started to buy a little and we sold soybean and we bought chloride.
The graph at the bottom on the right, just to illustrate, brings us the exchange between a ton of fertilizer MAP, urea with the bags of soybean. Here, I believe we should use nitrogenated for sugarcane.
But using MAP in chloride, we had a historical relationship of 13.50 and today we have 19 bags per ton of MAP, and here, we have 11. So it’s still a little higher this exchange, but there was an expressive recovery in terms of fertilizer per bags of product due to the drop in the price of fertilizers.
Here on the next, we — many people know our day-to-day work. We are in Q3, everything planted, harvest, 97% harvested in the case of soybean, 6% of corn. Most of our corn, we — so corn is harvested after soybean and also we have the winter crop for corn.
In the case of beans, 100% harvested, and in the case of cotton zero percent. We should begin to harvest cotton now at the end of May, beginning of June in the units in Bahia and a little later in Mato Grosso. So this is the situation.
At the bottom here, we see productivity in brown. Here, we see 7% — minus 7% in soybean versus estimate and here I’d like to explain this minus 7%. First reduction in the area and also in productivity.
These are farms that we sold and we did not plant in them and also less leasing in this volume. And everyone knows, we had two operational units in Bahia, Chaparral Farm and Arrojadinho, an expressive reduction in productivity in relation to last year due to the summer of 35 days.
And other units produced more. So in general, a drop of 7%. Part of this from reduction in the area due to sell of farms and also less — also lower productivity in Maranhao, almost 75 bags of productivity, very productive. And in the case of Bahia with this drought 40 bags per hectare.
So farms that last year produced 65 bags, 67 bags. So Arrojadinho produced 67 bags. This year we closed, we estimate at 40 bags, 41 bags, a drop due to the drought, an expressive drop in these two units.
But I believe this shows we were more dependent on Bahia than today, even with an expressive reduction in these two units. When we look at the whole company, we have a drop of 4%. When we exclude the areas that were not planted due to the sale of farms, then it’s 4%.
Now derivatives and how we are working on this, harvest 2022-2023 almost closed, very little to sell. Harvest 2022-2023, we have parts sold, 12% of the harvest sold at an exchange rate of R$5.73 per dollar and in the harvest now, we will have an exchange rate of R$5.38 to $1. In the past, it was higher, R$5.52 to $1. Now the — our currency in Brazil appreciated and now it’s lower.
Chicago, on average we sold at 14.62 and what we are selling for next year 13.50 — 13.5, on the last line, a very important part, which is receivables from farms. We monitor this in the P&L. When we look at total production plus receivables, we have 28% receivables, 11% production sold.
So we have an expressive — we have a good sales volume and receivables 13.78. So corn we have and we sold very little, hedge is small. We had positive results. We have a buffer to go to the market and get better prices.
Cotton, we are finalizing also selling, especially due to the reduction in Chaparral Farm and I apologize we didn’t put here as sold, because it’s not sold in New York, but we have sales of cotton.
We sold practically 25% of physical in the case of cotton, but we have 515. This represents 1,000 points on. We made some transactions of barter with inputs for the next harvest and it’s not only — this barter operation is not only inputs for cotton only we have sold 2023-2024.
So ethanol, we have begun to sell. In the last months, we saw an increase in the price of ethanol. So we are selling ethanol. And in the last line, receivables from farms, we have 2023, 100% sold, this was sold at Chicago 14.10 and 2024, 30% sold at an exchange rate of R$5.69 to $1.
Well, Gustavo, you have the floor. These numbers will help you a lot to explain things.
Gustavo Javier Lopez
Thank you, André. Good afternoon to all the participants in our conference call. Well, let’s see the main numbers. Here, we will present the nine months that ended on March 31st, our year begins on July 1st.
When we see net revenue R$663 million due to the same factors that we explained in the previous quarter. The company is selling everything that remained from the previous soybean harvest.
André mentioned 203,000 tons. This is what we expect. It’s almost all 100% harvested and in the future, 120,000 tons of corn and then a new period to harvest sugarcane. This drop in revenue, the main reason is lower amount of tons of soybean sold. We explained already in the same period of last year.
We had decided to sell a lot of soybean because there was an uncertainty in terms of logistics. It was a good decision — that’s one of the reasons also the price at the time, we decided to anticipate sales and this year we have — we are a little slower in sales.
Sugarcane, we already mentioned last year, we had begun with an average of 145 and we had a drop to R$1.14 and another problem that we mentioned this a reduction of 200,000 tons in sugarcane, which was the consequence of the fire that we suffered in the farm, which was — which affected 1.4 million tons.
So when we recognized the sale of farms last year, we had a lot of sales in Taquari Farm this year. We have a small sale already announced and also Rio do Meio. These are the reasons why we are having a drop in revenue.
When we look at adjusted EBITDA, R$168 million. We see that the margin, EBITDA margin drops 23%, last year it was 45%. And we have been saying this drop in margin in grains. We will see this in detail on the next page.
In the case of grains, if we had good prices, — the pressure on costs, especially fertilizer made cause this drop. And we also have sugarcane, we had mentioned. We had an impact of R$150 million and we explained R$50 million for a lower volume, 200,000 tons with an operational problem in the company, R$50 million due to the drop in price and the other R$50 million, the costs. Here we see net profit here, R$25.8 million and forward what do we have.
In April, as he mentioned, we announced the sale of the remaining part of Araucária Farm. We sold the remaining part of the farm. And this we have two contracts and this will be — it will be delivered and recorded in the next quarter. And we will also have the beginning of the new harvest for sugarcane and the harvest of corn and part of the winter crop too.
On the next page, as mentioned, we see here soybean, this volume that I mentioned here, 98,000 tons, last year 145,000 tons and 65,000 tons of this corresponds to the harvest work, harvesting now. The unit price, although, the value is higher, the prices are high and when we look at the cost per ton, this increase in cost affected the margin for soybean, 47%, 28%, but the prices are still good.
Looking at corn, 122,000 tons, we sold 100% of the harvest last year and this winter crop 90,000 tons that we had that — were the result of the winter crop. We had already paid high fertilizer costs and we see here the price per ton and the margin — you can see here the cost — total cost and the margin of 50% at the bottom, is higher than historical margins.
Sugarcane, this is the most important results, same situation. We had — we haven’t had the results of the new harvest. Here I’d like to remind you drop in the amount number of tons, 1.387 million to 1.161 million. These semesters in 2022 the rise — the price had gone up a lot and in 2022, the harvest that we are having now.
There was this drop in price here too. Taxes, the drop in the price of oil. So the price — the cost of sugarcane dropped now and when we look at reais per ton, you can see that why this cost is this way. So if we had the cost of 226, the cost would be 100 per hectare, but also this — also has to be added to operational problems that we had.
On the next slide, we will see operation — EBITDA of operations. Here to remind you, we have the net profit without sale of farms. We know that our fortress is the combination of the two results, operational and sale of farms.
Here, we eliminated the sale of farms. We included depreciation. We included results from derivatives. Here we see that we had R$40 million. We hedged, we made — we used a hedge when we bought the inputs and then the market price changed.
We had a smaller value being selling at R$160 per bag of soybean, we had hedged at R$150 and this impact gave us this negative effect. This year it’s the opposite. We are seeing in the region of the state of Mato Grosso, where we have important operations, we are seeing R$125, R$130 per bag of soybean and — so this is the impact.
On the right, we have the main crop that is sugarcane and soybean. So in the future, nine months, we will begin once again to harvest sugarcane, 600,000 tons to 700,000 tons. We will — the sale of 140,000 tons of soybean and also we will sell part of corn. So we are not seeing many opportunities for physical sales. We have sales in — we believe that part of corn will also have an impact in the next quarter.
Next page. Here, we see the company’s debt. We have a short-term debt, R$226 million; long-term, R$357 million; total debt, R$583 million; 96% CDI in Brazil; 40% with prefixed rates, below 10% interest rate, these are old debts — older debts; and until the end of the year, we have R$226 million, short-term debt R$200 million, we have to pay and we are working to take out new loans, because the leverage of the company is going to be very low.
Reminding you that we have R$450 million in receivables for farms and we consider there is part of a farm sale that was not recorded and will be recorded in 2024. In our Araucária Farm, we have twice as much as receivables. So we are in a comfortable position in terms of leverage.
Net debt, R$400 million. We have R$240 million in cash, but it’s — we have a low cash position, because we have receivables from the new harvest of sugarcane, soybean and we have already paid for many of the costs of this new harvest. So when we look at all of this, we see that the indicators, the numbers are very healthy.
On the next page, we can see the behavior of AGRO3, our share in relation to the stock market index, where we have high volumes of daily trade. We see that the share price is very low, a good opportunity. We have been making an independent evaluation.
This year we hired Deloitte. They visit farms to confirm the properties and we believe that the company’s share value is upwards of 39. So there is a great potential for this price to go up and a great incentive for you to invest in this company.
Now we would like to begin the Q&A session.
A – Ana Ribeiro
Thank you, André, Gustavo. I’d like to pass the floor to Pedro from XP for the first question.
Good morning, André, Gustavo. Thank you. Two points. The first on the sale. André mentioned a lot, exchange improved a lot. Could you explain the company strategy to sell? What are you expecting? What are you — when will you buy for 2023, 2024, the inputs, maybe the table that you gave us was very interesting. The margin per crop. What you are expecting in terms of margin per crop? Second point, an update on the recovery of the region where you had a fire in the sugarcane. What it will be the productivity for this area that had a fire and also how much do you believe you will capture from this price increase in sugar? And a third point very quickly, on the seed operations, seed production plant, whether this is your own? Is it outsourced the production of seeds, is it only for your own use or will you sell seeds in the future? Does it make sense to invest more in seed production?
Pedro, we could stay here all afternoon talking about these three questions. I will try to be brief and I will try to help you. Well, 2023, 2024, yes, we are monitoring and we began to buy. We are seeing that there is a curve, Chicago screen 1,350, 1,380.
The challenge we have today, when you look at what’s happening this year, there’s a giant increase in production and we had a drop in the basis. So the exchange, we have to do this with total price. It’s not only Chicago, it’s Chicago basis and everything.
So we believe when you look at the curve basis next year, when we made this budget a year ago, we estimated the basis of 45 positive points. With the Chicago that is very similar, 1,370 and we ended with roughly this.
So the basis went from 45 positive, today we have a basis of minus 100. If we look at the screen the future, we are talking about a basis, minus 5, minus 10. So you have a reduction, expressive reduction, a drop in price for future basis.
So what we see, what should we expect? We will be aggressive when we believe margins will recover, 30%, 35% EBITDA margin. Then we will be buying and selling. Right now, everyone is waiting, pressure on fertilizers and improving the margin.
So when will you decide to be more aggressive? When we get to something around 30%, 35% EBITDA margin, we will believe we will get there. We have done cost reduction. We estimate we will get to 30%. We will get to this margin. So this is what we are monitoring.
Sugarcane, the impact — there’s an impact from this fire. Not that you don’t lose the sugarcane. We have irrigated sugarcane. So when you have a fire, you have to use the irrigation in the area that was burned, instead of you have to put all the equipment to avoid, to try to recover the sugarcane that was burned.
When you have burnt sugarcane, you harvest earlier. So we had irrigated almost 4,000 hectares of cane that would be harvested at the end of the harvest. So we lost the extra growth, we would have in these 4,000 hectares where we used more water to guarantee productivity.
Parallel to this, all the sugarcane that you would irrigate, the rest of the sugarcane, you had to take the water to save the burnt sugarcane. So it’s not that we burnt 200,000 tons. The sugarcane that you irrigated you had to anticipate the harvest and the water you would use to increase production of TCH, you used to save — you used it to save the burnt sugarcane.
So in sugarcane, we expect a recovery. Apart from the recovery, especially in the Midwest we see a recovery. In the case of Mineiros, we are increasing the amount of sugarcane planted to recover this volume and with more investment. We have a structure to irrigate 20% more than we did last year, 20% more water in a region where water helps productivity, it makes a great difference. So we are making efforts in this sense.
Concerning price of sugar, Unfortunately, Pedro, all our sugarcane production is in ethanol, of course. If you have a recovery in the price of sugar, you improve — you can improve the price of ethanol. So these are points to answer your question.
And you also asked about seed production. What is the logic? As I said, five years ago, the cost of seeds per hectare R$170, R$190 per hectare. Today, R$750, R$800 per hectare for soybean, cost of seed.
So it was R$200, now it’s R$800. You have R$600 of extra due to biotechnology and other things. We began to produce seeds on a small scale. You as a producer, you can produce your own seeds, you have to register these fields for seeds, you produce your own seeds.
So we began small developing technology, internal knowledge, forming a team. Today we have a coordinator in the company for seed production. So we developed all of this, and we said, okay, let’s increase the production — a technical production.
So the investment we made was to improve the quality of the seeds at UBS located in Chaparral, why? Because there we have altitude to produce seeds. We have — beside Chaparral we have irrigation, so you can produce more seeds using irrigation and we want to supply the seeds we need.
There is no ambition to sell. No, it’s not our idea, it is not a business. We want good seeds to have a good cost reduction for the company. That’s the main focus. This is the learning curve in the next two years, three years. We learned how to do it, now we are using machinery, modern machinery and now we will increase the scale, produce more seeds.
We had 15% to 20% seeds. We want to get to 40%, 50%, 60% of the seeds we need. We are not going to produce 100%, but we want to reach 60%, 70% of the seeds we need. This would be very good for the company.
I can supplement with another point. Concerning the sale, we have soybean 65% is sold until July 30. What we want and we want to get to 80%, 85%. We see that the premium that was positive historically. We began to see that it becomes negative and the pressure of costs and freight is becoming very high.
Thus, now with an interest rate that is so high and we had a good winter crop for corn. We don’t see — in soybean we don’t see a price recovery. So we will try until August to have 100% of soybean sold.
Now corn, we don’t know. We have a large volume with hedge and we don’t see demand. We are looking for opportunities to sell and we are not seeing any demand. Concerning the budgets, we made a new budget. The great doubt in terms of buying fertilizer. We are not being able to see the premium and the freight next year.
So we were working with a freight that is very similar to what we are paying this year, maybe 0.5% below. The history of freight of 40 points basis. We have 13.5 for soybean Chicago. Thus a bag of soybean will give us R$140 or a little less. But with lower costs we are getting to values per ton, a little above what we showed here, a little above.
Corn, we are seeing a downward pressure, a drop, pressure lower than this year. And for sugarcane R$50 per ton. So we are making — we have made a new budget. But there are uncertainties. That’s why we are not selling. We are not being able to price soybean the way we want.
Okay. Thank you. Very good answers.
Thank you Pedro. Now Henrique from BTG.
Good afternoon, André, Gustavo, Ana. Thank you. First a follow-up. To understand — I’d like to understand your vision. The expressive reduction in the basis. How do you see this in the future and I know there’s a great difficulty in foreseeing? But what is your perspective for the next harvest. So I believe I’d like to hear a little more. Also a follow-up in terms of costs for the harvest 2023, 2024, could you help us to reconciliate the exchange, the drop in the price of fertilizer is there yet? Did this help the cost of production this year, looking at this amounts used at lower price, how should we think of the cost for 2024? And the last, you announced the relevant sale of Araucária Farm, what — how do you see the market for land, the price of land is going up and should you buy or sell?
André, before answering just let me join Helmot’s [ph] question, which is in line with Henrique. He sees that the company didn’t buy much land in the last few years in comparison with the sales, the land inventory dropped. What is the company’s strategy from now on? To lease land, because lease land because the price is very high or buy land in Bolivia and Paraguay or wait for opportunities with low price?
Well, this question is the million-dollar question. Let me try to answer. Fertilizer drop, what you said Henrique is true in Brazil, it’s true in most of the companies and it’s not true in our company. Why is it different in our company? We are a company that transforms land.
We have a lot of new land. In new land, you can’t reduce the amount of fertilizer when you are developing the land. So our dosage of fertilizers shouldn’t change much from last year to this year. The use of fertilizer will not drop a lot, because we are developing land also. So it should — we shouldn’t see great changes.
When we say there is a cost reduction fertilizer. Yes, we are not going to recalibrate the dosage last year, because we had new areas, we were not able to do this. For example, there is no area with soybean instead of 190, oh, I am going to use less fertilizer 100.
We have many new areas and this year we still have some new areas like you saw in the slide, Panamby. So in BrasilAgro, the cost reduction in fertilizer, the dosage difference is small, a little, but very little difference in the dosage of fertilizer.
The second, the future basis. This is an enormous challenge with the production we have. We will have to work on this. Our agricultural society will have to work on this, because you have a limit in terms of exports. We are seeing more planting in the U.S. if we see soybean should lose — should drop in volume in the U.S. and recover the price here.
But also, there’s another scenario we have a basis here, because we had the effect from Argentina. Everyone is buying soybean in Brazil. So if you think of — we have — so world production is changing and we are looking at the basis. If you have a new equilibrium in production, you remove the pressure on exports and you balance the basis.
So today we have Argentina with 25 million less and Brazil with 25 million more, everyone is buying soybean in Brazil. So in the medium- and long-term, if we have this new balance in production, you also balance the distribution.
Although, Argentina produces meal more than grains. But the way we see it, the basis should recover, not what we expected, we expected another 45 points. But like I said, if you look at the screen, we are looking at minus 10. So I believe there is space. With this rebalance due to Argentina and production in the U.S., we may have a basis of 30 points, 40 points. This wouldn’t surprise me.
In terms of land, I will try to answer the two questions. Yes, we will be — we will sell more. I always say the liquidity in land, both higher prices or lower prices in land, you need recurring years with higher yield, higher prices or lower prices.
There’s a lot of liquidity until now. We received more offers to buy farms. So we will continue being sellers, preparing the company for the time when we will have to buy again. So we will be always buying when there are good opportunities. We will always be looking for opportunities for many reasons. We will buy when there is an opportunity.
And what is important, although we are selling land. Although we are buying less than we are selling. We are also leasing. The productive area has grown — the production area has grown. If you look at history, operational EBITDA has been growing in an expressive way, maybe less purchase and more leasing of land. So we want to have 40%, 50% our land and 40%, 50% leased land.
So we have to grow in sugarcane because we grew a lot in grains. We want to grow in sugarcane with leased land. So opportunities, we will continue looking at transformation, transformation of pasture area to grains, we still have a lot and also alert to market opportunities in a market that if we have problems, we have liquidity to offer to producers. So, but we will be more sellers than buyers, we are being more sellers than buyers.
Very clear. Thank you.
We have another question from Angelo [ph]. Please say your name. We can answer an extra question. Angelo, we can’t hear you? Well, we have no more questions. We had a record public, record number of participants and plus people watching us on YouTube. Thank you. We are very optimistic with the end of the year, in spite of this more difficult scenario in price and operations. I’d like to thank André, Gustavo for participating and I’d like to pass the floor to André and Gustavo for their final comments.
Thank you, Ana. Once again, Ana, we will work. We will do our best to have more sales of farmland, although, we had a lot of sales. If you look at the net result of the sale, we will have very good EBITDA and net profit in the year when we consider the result of the sale. And there’s more to sell, there’s more to sell, more areas to work, leased areas, we are looking at some purchases and more sales.
As I said, we will have. I say once again, we will work to make more sales this year in order to monetize this good moment with a lot of liquidity, capitalize the company and when the time comes we will buy. We always said this. The company is prepared to serve these good moments and capture the results.
Thank you very much and I thank all those who prepared this material and participated with us. We wish you a good afternoon.