Yo, Aurélio Pavinato, CFO and IRO, Ivo Brum. It's a privilege to be here with you this morning. This video conference is being recorded and will be made available on the company's Investor Relations website, where you will also find the presentation. For those who need simultaneous translation, we have this feature available on Zoom. Just click on the globe icon labeled "Interpretation" at the bottom center of your screen. Select your preferred language: Portuguese or English. If you're listening in English, you can mute the original Portuguese audio by clicking on "Mute Original Audio." For the Q&A session, please submit your questions via the Q&A icon at the bottom of your screen. As usual, your names will be announced so that you can ask your question live. At that moment, a prompt to enable your microphone and camera will appear on your screen.
If you prefer not to activate your microphone and camera, please write "No mic" at the end of your question, and in this case, I will read it aloud for you. We would like to remind you that the information in this presentation, as well as any forward-looking statements made during this video conference regarding SLC Agrícola's business outlook, operational and financial projections, and goals represent the beliefs and assumptions of the company's management and are based on information currently available. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions as they refer to future events that may depend on circumstances 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 and lead to results that differ materially from those expressed in the forward-looking statements.
Now, I would like to turn the floor over to our CEO, Aurélio Pavinato. Pavinato, please go ahead.
Thank you, André. Good morning. We appreciate everyone's participation in SLC Agrícola's earnings video conference for the second quarter of 2025. Let's move to slide four, please, to discuss the cotton market. In the second quarter of 2025, months April to June, the cotton market showed limited fluctuations both internationally and in the Brazilian domestic market. There were some factors that put pressure on cotton prices and others that support cotton prices. For example, global cotton production for 2024-2025 and projections for 2025-2026 indicate a reduction of supply, which in theory supports the prices. In the United States, expectations point to a smaller harvest, which reduces supply in the global market.
Even with the slowdown in May, Brazil maintained a strong export pace in the 2024-2025 season, consolidating its position as one of the largest global suppliers of cotton. Demand for Brazilian cotton, especially from countries like China, helped support prices. In summary, the second quarter of 2025 for cotton was a period of stability. The physical market reflected caution on the side of producers and robust demand from the industry, while market players focused on long-term planning, keeping an eye on futures contracts and expectations for the next harvest. Let's please go to slide five to talk about soybeans. This quarter, soybean prices in the Brazilian domestic market followed a very stable path. In spite of fluctuations in international quotes, local premiums offset the drop in Chicago.
Some factors that influenced prices were as follows: In Brazil, the 2024-2025 harvest was strong, with record-high production bringing a large volume of grain into the market. This massive supply put pressure on prices. The progress of the U.S. harvest and favorable weather in key producing regions created expectations of increased global supply, further pressuring Chicago Board of Trade quotes and directly affecting Brazil reference prices. Globally, according to the USDA, the 2025-2026 supply-demand balance projects production to exceed consumption by only 1.3 million tons, which is the smallest positive balance in the last four years. Demand for soybean byproducts remained firm, particularly for crushing and biodiesel production. This was another factor supporting prices. Brazilian export volumes remained high, with China as the main destination. This shows that even with lower prices, the competitiveness and demand for Brazilian soybeans remained strong.
Brazilian soy continues to be a cornerstone of global food security. Now, let's please turn to slide six for a few words about corn. In the second quarter of 2025, corn prices faced downward pressure due to a combination of factors. Brazil's second crop, corn harvest, was one of the main drivers pressuring prices. April rains favored crop development, boosting productivity projections. This increased supply generated a surplus in the market, and as the harvest advanced, prices dropped in several regions of the country. In the United States, planted area and favorable weather conditions for the 2025-2026 crop season contributed to expectations of greater global supply. The outlook for a record-high U.S. harvest also impacted international prices and CBOT trading, causing a direct effect on Brazil.
Global corn production is projected at about 1.288 billion tons for the 2025-2026 season, while global consumption is expected to grow at a robust but slightly slower pace, reaching approximately 1.28 billion tons. This increase is being driven mainly by the growth in demand for animal feed, especially in Asian countries like China, and by the use of grain in biofuel production. Please, let's move on now to slide eight to discuss our crop performance in the 2024-2025 season. Soybeans, the current status is fully harvested, reaching 3,960 kg per hectare, which is 21% higher than last year and flat versus our budget and 11% higher than the national average. In cotton, we have harvested 50% of our crop, and the forecast is to reach 1,986 kg per hectare of lint, in line with our budget and 3.3% higher than the previous season and 5.1% higher than the national average.
Second crop, corn, was already harvested about 90%, and our projected yield per hectare is record high again, historically. In fact, we expect to obtain 8,274 kg per hectare, 9.7% above our initial forecast, at 16.7% higher than last year, and 35.6% above the national average. Now, turning to slide nine, we show our hedging position for the 2024-2025 season. We have advanced in our commitments in soybean, adding all of the commitments. We have reached 95% of soybean production. In corn, 70% of our production has been sold, and in cotton, 56.2% of our production. I will now hand it over to my colleague, Ivo Brum, who will discuss our financial performance.
Thank you very much, Pavinato. Could we please turn to slide 11, in which we discuss some of our highlights?
Firstly, our net revenue totaled BRL 1.9 billion, up 37.8% in the comparison with the previous period last year. This result shows higher billings of soybean and corn as a result of the higher yield and higher billed prices. In the semester, net revenue reached BRL 4.2 billion, growing 26.7%, a record high volume and revenue billed both in the quarter and the semester. Our adjusted EBITDA reached BRL 456.6 million with a margin of 29.9%. In the semester, adjusted EBITDA reached BRL 1.5 billion with a margin of 35.8%. This growth shows our ability to generate operational cash. Our net income was BRL 139.9 million, down 56.5% in the comparison with the previous quarter. This decrease was due to a lower posting of biological exits owing to the smaller marked area for lint and cotton pit, which is, of course, due to the cycle of development.
We closed the quarter with just 76% recorded, and last year, we had already recorded 100%. For the semester, net income reached BRL 650.6 million, an evolution of 18.2% in the comparison with the previous year, same quarter. Cash generation in the quarter was negative BRL 626 million, and in the semester, BRL 2.1 billion, reflecting the investment. In this quarter, we also paid for leases and acquisition of inputs. We also disbursed BRL 103 million respective to the minority stake on SLC- MIT. In addition to the disbursements, we also made some strategic investments, such as paying off BRL 180 million for the last installment of the Paysandu Farm and BRL 361 million relative to the acquisition of the Paladino Farm and BRL 95 million of the Unai Farm in Minas Gerais. We also made the payment for the acquisition of the minority stake of SLC Land Co. in an amount of BRL 280.9 million.
In slide 12, we discuss our debt position. Adjusted net debt closed the first semester of 2025 at BRL 6 billion, up BRL 2.3 billion in the comparison with 2024. This increase in net debt is related to the payments for the crop season and investments that were made. The net debt over adjusted EBITDA ratio closed the period at 2.3 times. The structure of the debt was very balanced, concentrated in the long term. Today, our debt profile is 35% in the short term and 65% in the long term with a duration of 980 days. We are working to lengthen the debt profile to ensure an amortization schedule that's adequate to our operations. In slide 13, we talk about the distribution of the net income of the controlling company. On May 15, we paid out BRL 241 million of dividends to shareholders with a payout of 50%.
In the last five years, we distributed BRL 1.9 billion with an average dividend yield of 4.9%. On slide 14, we talk about our land valuation. In early July, we announced the valuation of the land of the company that was carried out by Deloitte. The land was assessed at BRL 13.4 billion, an appreciation of 15.6% in our portfolio. In the comparison with 2024, at the value of acquisition, the appreciation reached 7.1% in the total land portfolio, and the current value of the average hectare is BRL 58,960. After this evaluation, the net value of the assets increased to BRL 14.1 billion, and the net equity per share reached BRL 31.90 in this quarter, above the amount of BRL 28.50 that was posted in December 2024. Now, turning to Aurélio Pavinato.
On slide 16, we'll talk about the prospects for the 2025-2026 season.
We'll start planting for the 2025-2026 in September 2025, and we continue to buy inputs. 95% of phosphates were acquired, 100% of potash, 60% of nitrogen, and 91% of our crop protection. We enjoyed the opportunities that were presented in the market. Currently, the fertilizer market has an upward trend, especially considering some specific inputs. The company is watching closely geopolitical factors and global demand to close its fertilizer and crop protection package. The inputs that are still missing will be used for the second crops that will be needed as of February 2026, and they have less exposure to the geopolitical risk scenarios. On slide 17, we talk about our hedging for the 2025-2026 crop season. We have also made advances in the hedging positions for 2025-2026. We have locked 56.7% of soybeans, adding all of the commitments, and we locked 25% of cotton and corn.
We fixed 7.3% of our production for 2026. Can we please now move to slide 18, in which we would like to discuss the current expectations of acreage for 2025-2026 after the recent acquisitions of Sierentz Agro Brasil, and we'll also discuss our expectations in relation to irrigation. With the acquisition of Sierentz Brasil, the company expects to plant around 830,000 hectares in the 2025-2026 crop season, up 12.9% versus 2024-2025. In early July, we published a memorandum about the acquisition, and we also announced a contract for quota acquisitions and other agreements with Terra S.A., that is, we sold BRL 115 million for the operation in Piauí for strategic reasons. Now, let's talk about our irrigation project. In July 9, we announced the expectations of growth for irrigated land in 2025-2026.
Irrigation is aimed at mitigating climate risks and maximizing the use of land for the production of second crop, and also will increase yield and give more stability to our production. Bahia and the state of Goiás have proven potential for irrigation. They are national leaders in the expansion of irrigated agriculture. The use of watering in those states has revolutionized yield with more safety in crops and even enabling two crops in the same year. In the 2025-2026 season, we will implement irrigation in 3,300 hectares. Currently, we have 6,000 hectares with irrigation, and our intention is to reach 53,000 hectares irrigated in our portfolio. Thank you very much. Now, we'll begin our Q&A. I'll turn it over now to André.
Thank you very much, Pavinato. We'll begin now our Q&A.
We kindly ask you to submit your questions in writing all at once and to wait for the company's answer. Remember that to ask questions, you have to press the Q&A icon at the bottom of your screen. As usual, your names will be announced so that you can ask your question live. At that time, a prompt to activate your microphone and camera will appear on your screen. If you prefer not to activate your microphone or camera, please write "No microphone, no camera," at the end of the question, and I'll read it aloud. Our first question is from Barra from Citi . Barra, please proceed. You can activate your camera and ask your question.
Can you all hear me?
Yes, we can.
Hello, Ivo. Hello, Pavinato. I have two questions, if you don't mind. First of all, congratulations on your operational performance.
It shows that you're really ahead of the curve in terms of costs. Now, my first question, it's about your capital structure. We see that SLC is a little bit more leveraged than recently. Also, because of the expansion in land and the investments that were made recently, my first question is, when you look at the portfolio, could we think of any optimization of your portfolio, maybe even a sales leaseback of areas that don't have much potential for appreciation and the purchase of areas with higher potential of appreciation? You know, in terms of performing areas and non-performing areas, is there a discussion in that sense? Also, how should we envision the deleveraging process? It seems that in this crop season, yields are high, but what should we expect in terms of the leverage cycle?
Also, going back to the 2025-2026 crop season, what can we expect in relation to the mix of crops? You have already closed much of the hedging, but it seems that you are really, you know, have a plan for the next crop season. If you could say a few words about the crop mix, it would be helpful for us to crunch the numbers here on our side.
Thank you very much, Gabriel, for this question. Leverage, Gabriel, in this moment of the cycle, we have now closed. You know, we have the forecast for all costs for the 2025-2026 crop season. Now, we'll have the cotton and corn harvest. The first, the second semester is going to be a selling semester. This quarter, in fact, is the peak of that. Next semester, this will drop because we'll start billing and shipping.
The new payment period will be only in 2026. That's the only time in which we'll start paying our suppliers again. About the deleveraging cycle, we made some very important acquisitions. This is, of course, a process that takes a little time when you buy land. In our understanding, in the next three to four years, leverage will come down because we have good cash generation, and deleveraging is not going to be done. We're going to continue maintaining the payout level we have now. It's going to be a gradual process. This doesn't bother us because we understand that 2.3x ratio is very acceptable, very reasonable.
In fact, thank you, Gabriel. I would like just to go back to the portfolio and leaseback program. Today, we have 38% of our operations in owned land and 62% in leased land. We are moving towards one-third, two-thirds.
There's always this option of increasing leased land or rather, you know, having them in a lower proportion than owned land. We are trying to maximize return on invested capital. We know that return on investment when you own the land is very appealing, but very appealing when you include land appreciation. That's why we don't sell this land, and the return doesn't come to the cash, and we don't see. This balance between leased land and owned land is what's going to give a better return on investment to our shareholders. In relation to the 2025-2026 mix, the three farms we have recently announced we acquired, we're going to plant soybean and corn. The cotton adjustment will depend on the area of each farm, the areas where we already plant cotton in those farms. In the current crop season, we are now building a new gin in Parnaguá farm.
This is going to help us adjust the area. Probably in October, we'll have the decision. Growth is going to be based on corn and soybean, and in cotton, we'll make adjustments depending on profitability and the contribution margin of each of the farms in which we already plant cotton. Thank you very much. We will continue to grow our seed business as well. Soybeans and corn seeds, yes, we shouldn't forget that we have also the seed business that's growing, and it's going very well. Also, livestock. We are now with a greater number of head of cattle. These are, you know, two other projects in addition to the three traditional ones. Thank you, Barra.
[Foreign language]
We have a question from Pedro Fontana from Bradesco. Pedro, please activate your microphone and camera.
Good morning, everyone.
Good morning, everyone. Thank you very much for taking our questions. One of them is about the soybean margin. When we consider unit cost along the year, it's in line with the guidance, but in the comparison with the first quarter, there is a worsening. Is there a reason for that? Is it the mix of farms? Also, in relation to the impact on the second quarter, what could we expect for the second half of the year? In relation to the hedging strategy, 56% of hedging with a price that's still under pressure gives us a little concern. How does this compare with the historical hedging program? What are the triggers to accelerate this hedging program?
Actually, as a coincidence, I had looked into this this morning. We know that there is the soybeans from Mato Grosso from the Midwest coming in this period. The costs are very diluted.
Soybeans that are shipped from Mato Grosso are always cheaper than the rest of the country. In the third quarter, we have different mixes with different regions. Costs go up, and we end up with a scenario very similar to the second quarter. It's actually the period of harvesting in the different farms that makes a difference. The question is about the hedging for cotton. Yes, hedging for cotton, precisely. Cotton hedging is in line with our historical perspective. The dynamics of the cotton market have been changing significantly. Fifteen years ago, it was the northern hemisphere that produced cotton, and there was a season in the second half of the year, and then there was an off-season. Now, Brazil has become an important cotton player in the world. Brazil enjoys a benefit, actually a benefit for consumers, which is cotton available 12 months a year.
The world cotton market today doesn't really have a need for stocking up, thinking of the off-season period. This is an important shift in the market dynamics. The second variable that we have to think about is the geopolitical instability, which creates a lot of uncertainty in relation to the GDP of consuming countries in the northern hemisphere, in Europe and the United States. Because of this, there is insecurity in relation to stocking up as well. It's a moment of instability and uncertainty in demand. The third variable is, we have high interest rates. What do speculators do? They invest in fixed income, and they don't invest in commodities. Today, they are long on the fixed income. All of this has reduced liquidity in cotton contracts. All of this creates barriers for obtaining future hedging. However, we are operating at a very close level to our historical pattern.
We are harvesting cotton now, and this cotton will be delivered from August 2025 to July 2026. This is the timeline for exporting cotton. We stock up cotton 12 months a year. We have 12 months to sell the balance. You never know the level of quality. It's usually 30% at least you have to sell spot. This is the current scenario for cotton. At the same time, prices are under pressure, but the three factors I have mentioned are behind this price pressure. We are relatively comfortable in saying that there's negligible room for further price decreases.
Thank you very much for this very complete answer.
You're welcome.
Now, let's ask Bruno Tomazetto from Itaú BBA. Could you please activate your camera and microphone to ask your question?
Good morning, Pavinato, Ivo, and André. I would like to talk a little bit about the tariff implementation.
We are still watching closely the development of negotiations between the United States and other regions. Could you please give us an update? How do you view these variables? What about price fixation? This will depend on some variables. Could there be some opportunities for other companies to emerge? Just to follow up the previous answer, it is obvious that there is a limit to leverage, and it seems that we're coming close to this level, but we would like to know whether you think that there are some very attractive opportunities in the market with discounted land. Are there any opportunities that might appear in the near future?
Thank you very much, Bruno. Firstly, about tariffs. As I said, this is a time of high uncertainty. The market dynamic is changing, and the shifts are very sudden.
What's become clear for us is that the United States, under the Trump administration, is going to be a closed-off country with higher import duties overall in relation to all countries. From an almost negligible level of tariffs, the United States is changing from 1% to 2%. The United States is implementing tariffs of 15% in import duties. The political background and also the conflict between BRICS and Brazil have interfered with economic issues, and this adds an additional level of uncertainty. In addition to the geopolitics, we have the national scenario and the uncertainties of Brazilian politics leading to retaliation from the United States. It's difficult to have clarity. We cannot really say what's going to happen. When we think of the overall picture, you know, cotton, soybean, and corn, and what we import from other countries, and what might happen in a radical market shift.
Today, when we think of fertilizers, we import fertilizer from Russia and also the United States. Brazil imports 26% of fertilizers from Russia, and the United States, 14% of fertilizers are imported from Russia. This interdependence of fertilizer and countries has existed for a very long time. It's very, very difficult to break that and to become self-sufficient. The same in relation to agriculture and commodities. Brazil and Argentina today export commodities to the Asian countries. The Asian countries depend on those imports for their supply. Now, to ask, is trading going to be limited? Is the United States going to reach an agreement with China? Will China agree to import more from the United States than from Brazil?
It might happen, but this creates other opportunities for Brazil because when we consider the volume of grain in the world, there is a certain volume globally that meets a certain global demand. If Brazil is going to sell less to China, we're going to sell to another country. Today, this is what's going to happen. You know, this is happening. Soybean from Brazil is being sold to other countries and cotton as well. In fact, they are intercommunicating vessels between countries. Even with all actions that may occur, it's going to be very difficult to completely change the market dynamics and for us to suffer a huge impact. Global demand for agriculture commodities has already been determined. Somebody has to produce it. As Brazilians, we are always concerned about how competitive Brazil is in the traditional markets and how competitive we are in the comparison with other players.
This is the background which gives us this confidence that we can continue to invest and expand leverage while we enjoyed the opportunities that were available in the Brazilian market and in the international market because of the decrease in commodity prices. We want to have a leverage level of at the most two times the EBITDA. We want to get closer to two times by the end of the year. For the coming years, for the near future, we're going to grow less or more depending on the opportunities, the level of leverage, and also interest rates. You know, with an interest rate of 15%, it's one scenario. At 12%, it's a different scenario. With interest rates going down, yet another one, of course.
We are, of course, at the limit of our leverage level, and we thought that there were some good land opportunities, and that's why we made the acquisitions. This is how we understand the leverage and the geopolitical scenario.
Thank you very much. Very clear.
Thank you, Bruno.
The next question is from Larissa Pérez, JPMorgan . Larissa, could you please activate your camera and microphone? Larissa, are you there?
Pavinato. Ivo, I have two questions, one for Ivo and one for Pavinato. Ivo, in the beginning of the conference call, you talked about the liability management program. Today, leverage is a little bit higher. CapEx is a little higher as well. Could you give us a little more color on what to expect in terms of liability management and also upside in cash generation with reduction of interest expenses?
For Pavinato, it's very clear from what you said in the beginning of the presentation, what you said about the inputs that are still missing. Nitrogen is the bottleneck. You just have 60% acquired. I would like to know, what are you waiting for to advance in the purchasing? What could be the triggers? I just wanted to understand what's happened with nitrogenated products.
Thank you very much, Larissa, for this question about our debt. We have some payments to make because of the acquisitions we have made. We don't have major disbursements in the coming six months, however. For the coming year, you know, interest expenses will be gradual because we still have some very important payments relating to those acquisitions next year. If interest rates go down, of course, this will immediately reduce our interest expenses.
If there's a decrease in interest rates, you know, as you know, two times EBITDA, this is the healthy debt level that was approved by our board, but we've been very selective. This level will be reduced in the near future, in a couple of years, but gradually. This is not really the key factor. It's something that can be resolved. We have cash generation, positive cash generation, and this gives us, you know, the way forward. You know, of course, we have an investment plan to be fulfilled. We want to invest in other activities, and we haven't given up on that idea. We're just waiting for the best moment to sustain these plans.
Thank you.
Thank you, Larissa, for this question on fertilizers.
Fertilizers, when we look at the fertilizer package used by Brazil, how more expensive they are versus historical prices, the average of the last 10 years, discounting any outliers. Today, fertilizers are 40% more expensive than historical prices. This is a high price. It's an expensive product for low-priced commodities, and not only for Brazil, for global producers. You know, the margins for American producers are also very, very dim, very tight. In this scenario, there is a limit to how much these prices can climb. Of course, the war led to this uncertainty, to this peak in prices. When you consider that the prices of commodities and the price of inputs, including fertilizers, depend on each other, there is a correlation. Peaks in inputs always happen when there is a peak in commodities.
Now, when the commodities are being traded at low prices historically, fertilizers eventually go down in prices. Today, there is this geopolitical uncertainty that led to this price peak in fertilizers. In our vision, at some point, there will be a rebalancing of fertilizer prices. They will go down closer to historical levels. Of course, there are some variations depending on the product. Phosphorus and nitrogen are the more expensive. Others are just 13%. For example, in the case of potash, nitrogen and phosphorus are more expensive. This timing, in this case, we are waiting for a future adjustment of prices that will enable us to complete the buying.
Thank you very much.
Thank you, Larissa.
Next question now from Pedro Fonseca XP. Pedro, please go ahead.
Hello. Thank you very much for answering my question. I would like to talk about costs a little more.
I'm not sure if you have already commented on this. I was participating in a different call. When we look at the input acquisition purchasing curve, the impression I get is that the cost for the first crops are now covered. Can you give us some flavor on what we can expect on the cost per hectare for 2025-2026? Also, when we consider the purchasing curve, in the release, you said that you, you know, I would like to understand, you know, the cost conversion for the fertilizers. When we look at the purchasing curve, the impression we are in is that the company is outperforming the average of Brazil. You know, when we think of the delivery schedule, that you're lagging behind. In the case of Russia, have you seen any moves in the market preparing for possible sanctions?
How disruptive do you think this could be, especially when you consider the import data and lineup? We do not believe that the market would be prepared for a disruption in fertilizer deliveries. The company, yes, but maybe not the market. I would like to ask you, what have you seen happening and how impactful could this be?
Thank you, Pedro, for your question. We have purchased inputs at the right time, I mean, considering the market situation. We hope to conclude the price formation for next season with few variations in production costs. Brazil's production cost for the next season will be higher. This is a general trend. If there is no price variation, of course, and we don't expect this to happen in the next season. In this case, there would be margin compression. I believe that we are well positioned for the next season considering cost formation.
This is something that we're going to announce soon. As for supply, as I said, Brazil imports 45 million tons of fertilizer. 26% come from Russia. Russia is a very important source. Potash is their most important export. 35% of potash purchased in Brazil comes from Russia. Nitrogen is just 16% and phosphorus around 27%. Brazil is not as reliant on Russia in nitrogen as it is in potash. A disruption in this chain will cause a revolution in the market. Who is going to supply whom from where? Will it be possible to make what is needed? A more aggressive disruption would be like a revolution in the world in the food production chain. That is why we don't believe it's to be expected. Multilateral agencies have an obligation to preserve food security during the war.
When the war in Ukraine began, in spite of all sanctions, fertilizers were not under sanction because this is a basic need for food production in the world. Today, multilateral agencies have no strength. Trump's strategy is to undermine these agencies. Up to now, they have had a very important role in keeping or preserving the basic needs. Fertilizers are necessary for food security in the world, including Brazil and also the United States. 14% of all fertilizers in the United States come from Russia. Brazil uses 45 million tons of fertilizer, and the United States for 51 million tons of fertilizer. This is the scenario we live in, a scenario in which we are not really sure what's going to happen. At the same time, we have the confidence that globalization and the communicating vessels will prevail over political sanctions and blocks.
Thank you very much, Pavinato.
Just a quick follow-up on crop protection. Can you hear me? Yes. Okay. We see crop protection prices decreasing, and we know that it's part of your strategy to close margins at the time of the acquisition. I would like to know if your advance crop protection purchases are in line with your strategy or if there is any change in the trends of crop protection prices.
Crop protection saw prices decrease at the end of last year to even lower levels than historical levels, and it's remained there. Some product prices went down, others went up because of scarcity this year. If you purchased early, you probably paid more. This is what we did. We didn't buy because prices were high, and we succeeded in buying at lower prices. Crop protection prices have not really oscillated much this year. It has remained pretty much the same.
I'm talking about dollar prices, of course. In BRL, it's cheaper now because of FX than a couple of months before. In dollars, there are some products that are a bit cheaper, some a bit more expensive. In the basket, overall, I think probably a little bit cheaper than last year in dollars, of course.
Thank you very much. Very clear.
Thank you, Pedro.
Now, next question is from Julia Rizzo, Morgan Stanley. Julia, could you please ask your question?
Hello. Thank you very much. It's a very quick follow-up on the realized soybeans results. Maybe I'm not really reading this chart right, but realized prices in the first half of the year are relatively low in comparison to the expectations using the data we have on foreign exchange and hedging. I think it's $112 a bag or $11 above 6. This is the price we would expect.
Is my math wrong? Was it the basis that increased? Do we have to consider a higher basis? Because most of the soybeans have already been sold, right? Could you please explain?
Basically, the hedging is at the port, and it's an average price. It's the basis, which is the factor that's not clear to us, but it's always an average price. In the first half, we had sales that were closed eight months before in mid-2024 at that price and at that foreign exchange rate. The BRL, you know, FX accelerated at the end of the year. We sold, and we had to pay off our suppliers in January and February. We distributed the FX along the year. It's always an average number. If you're seeing that the first half is below average, it's expected that the second half of the year we'll see an increase.
Maybe the best question is the difference between the farm price and the average hedge price. What should we consider as a?
It depends on the FX. $2.12, $2.40, dollar per bushel. We can give you this number because there is also the logistical costs between the farm price versus the prices at the port. Another important difference is what region the grains are being shipped from. A lot of shipments from Mato Grosso take place in the first quarter. In the second quarter, you have basically 50/50% in shipments. In the second half, it's usually the time for shipments from Bahia and other regions, and then the basis is going to be lower. You have to take all of this into account. Just in conclusion, the BRL 730 per ton, around $100 per ton in soybeans as the net income.
This is not what was expected considering what's there to be sold. You mean to be sold? Yes, the total of the season. I cannot really tell you right now. What I can say is that the second quarter has a greater mix of regions. The first quarter is usually Mato Grosso, but in the year to date, everything depends on the time of sale. I would have to consider what's left to be delivered, what were the negotiated prices to tell you for sure. The margin in the first half seems very good to me, quite relevant in BRL per ton. Yes, in the previous quarter, we had losses, but I think that the margin is quite high.
Thank you. Thank you.
Thank you, Julia.
Our next question, I'll read it. It comes from Victor Modanesi, UBS. I'll read it here.
Victor would like to understand how the company views the premiums at the ports, considering the benchmarks of Paranaguá for soybean that's trading $2.00 per bushel for premiums. It is important to understand how much of this premium is being captured by the company and what the expectations are in relation to cotton and soybeans, of course, with more demand domestically because of the tariffs and tension. The second question, what is the maintenance CapEx and expansion CapEx, considering the irrigation project, considering that it was around BRL 500 million for maintenance and BRL 600 million for expansion? Should we consider that CapEx will grow together with the land expansion? Thinking 2027 and 2028, what would be the investment expectations for the expansion of cotton acreage?
Okay, I'll answer about premiums and then Ivo. Thank you very much, Victor, for your question.
Soybean premiums are at $2.00 per bushel, the same level that they reached in the first trade war. In fact, expectations are being met. Buyers prefer to buy soybeans from Brazil instead of the United States. The expectation is that in the coming months, in October, November, and December, China buys from the United States, but it hasn't bought yet. Let's keep a watch on that to see whether China will be buying soybeans from the United States or not. In this case, the premium will probably be quite high. When we consider the new crop season, 2026, prices are at historical levels, $0.40 to $0.70 per bushel. If there is no progress in a trade agreement between China and the United States, and if China continues to buy soybeans from Brazil, there will be better premiums in the next crop season. This will probably be positive for our exports.
Cotton premiums in the international market are under a lot of pressure. What Asian clients pay for American cotton is very low. A historical premium in Asia would be 1,000 points, $0.10 per pound, and now it's at a level of 700 points in Asia. Not only for Brazilian cotton, Brazilian cotton has a lower premium, but even American cotton. In the case of cotton, the American actions are more traceable. There is a project that's called Buying American Cotton Act.
[Foreign language]
If it's clothing made with American cotton, taxation will be lower than clothing imported from Bangladesh. This is a project that could lead clients to buy more cotton from the United States than from Brazil. Fortunately, the American crop season is smaller, so there will be a shortage of cotton in the market. There is pressure on the cotton premiums all over the world and also in Brazil, and in Brazil even more because of our record-breaking season harvest. We are supplying cotton 12 months a year, and our cotton is cheaper. This is the short and long of it.
About CapEx, thank you for this question. This is a moment in which we are still preparing our budget. We have been visiting some farms. We are collecting information about the needs for investment and costs.
Also, in visiting the recently acquired farms to measure or to determine how much we should invest. Interest rates, the high interest rates have an impact on what we decide to invest. We have some projections, and they are very sensitive with a high interest rate. Of course, we'll try to have fewer investments. We cannot really determine CapEx for next year. Right now, it depends on the interest rates, and we have to analyze the financial impact. Everything is now being studied. We cannot give you any guidance.
One more question from Victor about yield.
[Foreign language]
We saw another adjustment in corn productivity with a record for the company. Could you please explain what led to this positive revision? How could we understand that? Thinking of 2025, 2026, could we expect the yield rates going back to normal, or will the yields continue to be high?
Yes, yield was above the trend line because of the rains in April, May, and June in Mato Grosso and Maranhão. Owing to this, even if we planted corn a little later than expected, we thought that we could actually lose some productivity because of the delay. We were blessed with additional rain, and we had record high productivity. For the coming year, we are probably going back to the trend line because we know that a long time productivity will continue.
[Foreign language]
Some years will be above, and in some years will be below the trend line. This year, we were above the trend line. We'll be announcing the projections for corn at a lower level than this year, following the logic and the trend line. There's always climate, which is a variable that can maximize or penalize productivity. When we announce our projected yield, everything is based on an average, on a climate average too. That's why we call it the trend line.
[Foreign language]
Thank you very much, Pavinato.
We would like to remind you that to ask any questions, please press the Q&A button at the bottom part of the screen. If there are no further questions, we'll now close our earnings video conference for the second quarter 2025. The investor relations department will be happy to talk to you and ask any questions you might have. Thank you very much and have a great day.