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Bunge Ltd. (NYSE:BG)

Q3 2007 Earnings Call

October 25, 2007, 10:00 AM ET

Executives

Mark Haden - IR

Alberto Weisser - Chairman and CEO

Jacqualyn Fouse - CFO

Analysts

Christine Mccracken - Cleveland Research

David Driscoll - Citigroup

Kenneth Zaslow - BMO Capital Markets

Diane Geissler - Merrill Lynch

Robert Moskow - Credit Suisse

Christina Mcglone - Deutsche Bank

Vincent Andrews - Morgan Stanley

Pablo Zuanic - JP Morgan

Christine McCracken - Cleveland Research

Presentation

Operator

Please stand by, we are about to begin. Good day everyone and welcome to Bunge’s Limited Third Quarter Conference Call. Today’s call is being recorded.

At this time for opening remarks and introductions, I would like to turn the call over to Mr. Mark Haden. Please go ahead, sir.

Mark Haden - Investor Relations

Right. Thank you Bill and thank you everyone for joining us this morning. Welcome to Bunge’s Ltd. Third Quarter 2007 Earnings Conference call. Before we get started I wanted to inform those of you who may not have seen it in the press release this morning that we have prepared a slide presentation to accompany the discussion of the third quarter financial results. They can be found in the investor information section of our web site, www.bunge.com under Investor presentation.

With me today to discuss our results are Alberto Weisser, Bunge’s Chairman and CEO and Jackie Fouse, Bunge’s Chief Financial Officer. Reconciliations of Non-GAAP measures to talk orally on this conference call to the most directly comparable GAAP financial measure are posted on our website in the Investor Information section. Before we proceed I would like to read the Safe Harbor statement. This call may contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 including statements about future financial and operating results. These statements are based on management's current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. The pertinent risk factors can be found in our SEC filed reports.

And now, let me turn the call over to Alberto.

Alberto Weisser – Chairman and Chief Executive Officer

Good morning everyone. Bunge’s third quarter results were exceptional. Agri-business operations improved across the board and fertilizer continued to perform strongly. In the third quarter our oil seed processing, grain origination and distribution businesses performed well across a variety of regions and commodities. This performance was a result of the broad geographic footprint and product portfolio that we have built in recent years as well as good risk management decisions in a dynamic market.

Take our grain and distribution market for example which were particular stand outs this quarter. Production shortfalls in some key consumption markets such as Europe provided opportunities for greater volume of exports for a variety of grains from our operations in North and South America and Eastern Europe. We also benefited from integration. Opportunities to create value can appear at different points on the chain depending upon market conditions. Recently we have seen a temporary shift from food products to agri-business. Having an integrated business that stretches from farm to retail shelf enables Bunge to capture value wherever it appears. We will continue to enhance the integration of our operations while expanding into new areas and products such as sugar. Earlier this month we closed on the acquisition of our first sugar cane mill and ethanol production facility in Brazil. This acquisition represents an important step in our strategy to become a global and fully integrated player in the sugar value chain. It extends Bunge’s activities beyond sugar trading and marketing and complements our existing agri-business and logistics activities in the region.

Now, I would like to turn the call over to Jackie who will take you through the third quarter results and outlook.

Jacqualyn Fouse – Chief Financial Officer

Thank you, Alberto. Good morning everyone. Thank you being on the call this morning. I would just remind you as Mark mentioned that there are some slides on the web cast so you can follow along with the comments that I’ll make to the numbers. Looking at the consolidated results and highlights of the income statement for the third quarter, we can see that in total we have volume increases of 16%, so over 37 million tons in the quarter and all segments had double digit volume growth in the quarter with the exception of fertilizer, a result for that segment which was anticipated and we will talk about the segment’s specific results in just a moment.

Operating profit grew over 200% in the quarter and drove net income and EPS growth. Growth in net income and EPS in a relative sense, in a percentage sense were a bit slower than operating profit growth due to the higher effective tax rate moving up to 26% in the quarter. These outstanding results were produced even as we had somewhat higher SG&A costs. Those were impacted by high variable costs due to higher volumes, a little bit of currency and some spending to continue to build our food business globally and a few other miscellaneous expenses.

Turning to the segment specific results. When we look at agri-business, all regions in agri-business showed improvement as is the business lines volume growth for the quarter was at 19%. I would highlight the Europe and South American grain origination and oil seed processing where margins were higher with strong North American grain exports. Ocean freight performed well in the quarter versus the tough quarter last year. Distribution volume and margins, all improved as well and as Alberto mentioned our risk management strategies worked well and we didn’t strike an inability to manage our facility and shifts in global trade flows as well as leverage our global footprint in our integrated model. Everything aligned very nicely in agri-business during the quarter.

In the fertilizer business, total volume was down 1%, the retail business was up, the nutrients were down. We experienced a little bit of a market share loss in this quarter due to our focusing on farmer credit and on higher margin sale business. Margins in fertilizer continued to benefit from higher international prices and ocean freight rate.

With respect to food products and animal oil the results have been affected by higher SG&A is due to continuing to invest in this business to build it out especially in Europe and Asia. We also continued to see high inventories in the U.S. and high raw material prices in Europe so it remains difficult environment for oil but we do have an improving outlook for that business and we will talk about that a bit later when we cover the outlook In corn milling the results benefited from higher volume and in food products mix.

There are a few highlights from the balance sheet. Our operating working capital for September 30th 2007 compared with September 30th 2006 grew by 35% driven by inventory growth of 64%, with the readily marketable component of that growing by 73% and as you are very familiar with that fall due to higher commodity prices as well as our volume level. And just to give you some reference points, when we look at September 30th ‘07 versus September 30th ’06, the CBOT [ph] crop prices, seedlings were up 81%, foreign 42% and leaf 112%, so the inventory increase has to be put into that context. At the same time that we see this growth we also saw our working capital efficiency improve in the quarter and we measure ourselves by the cash cycle calculations that we do on the 12 months earnings basis and we have seen a several day improvements in the cash cycle which gives us confidence with what we are doing with respect to working capital efficiency.

Total debt grew by 27% lower than in the working capital growth. Again I would just, same period and shareholders equity is up by 42%. Thus you can see that we continue to strengthen the balance sheet. With respect to cash flows, funds from operations and those before working capital changes were very solid for the quarter, just under $500 million driven by the strong profit. We saw improvements in working capital and some results from our working capital efficiency in a relative sense. As I mentioned our cash cycle has improved and we are seeing a slowing in the rate of increase of working capital, working capital still will go up in the quarter and for the nine months ended it is still a big usage of cash number but we have been encouraged by the recent trends that we have seen.

Our cash flow from operations, after working capital turns us for the quarter were positive, we are very happy with that. It remains negative for the nine months given because the working capital increase is… and we remind everyone that we do have seasonal volatility in our quarter numbers and the businesses, best looked at on a full year basis.

Turning now to the outlook, we expect a solid finish to 2007. The market fundamentals are good. They look good on both the supply and demand side based on what we are seeing right now here at harvest they are looking good. We anticipate higher crop plantings in South America and the most recent USPA global forecast for growth in soybean meal, investiture oil and the cake respectively 6% and 4% for the 2007, 2008 cycle life which are slightly ahead of the ’06, ’07 cycle. We continue to see a good farm economics and those should support continued good demand for fertilizer.

With respect to our specific financial guidance for 2007 full year, we have increased that guidance by $60 million for net income to a range of $690 million to $710 million or $5.31 to $5.46 per share incorporating a weighted average number of shares outstanding up about 130 million. It also includes an effective tax rate estimate of 24% to 28% which is up from the last ranks that we gave you of 18% to 22% as we are earning income… more income and higher tax jurisdictions and moving into a range which would be closer to our sustainable long term range for taxes.

So, to summarize from our side that the agri-business basically fired on all cylinders improved the stellar results in the third quarter. With our diversified geographic and product portfolio we might normally expect to not only have all the stars aligned on the perfectly as they did this quarter but usually we would have some twists and tights in that, diversified portfolio, really an exception for the agri-business. Fertilizer dust off for the year, it had an exceptional year in terms of overall segment dynamics, it’s performing above its trend line which benefited from above average volume growth, favorable input prices, higher margins, higher freight rates. And Foods we have somewhat underperformed versus where we would like to be but the outlook in that business is improving. We are also seeing the Real strengthen and we move into… through the rest of the year and into 2008 as we mentioned very good sector, fundamentals and relatively optimistic outlook and we would probably anticipate market dynamics along with trend line type expectations.

And with that I think we will open it up to questions and answers.

Question and Answer

Operator

Thank you Miss Fouse. [Operator Instructions]. And our first question comes from Christine Mccracken, Cleveland Research.

Christine Mccracken – Cleveland Research

Good morning.

Alberto Weisser – Chairman and Chief Executive Officer

Good morning, Christine.

Christine Mccracken – Cleveland Research

Congratulations on a fantastic quarter. Just wanted to touch a little bit, get more detail around Europe because it does seem like that area obviously has been affected quite heavily by drought this year and yet you noted that it looked a very strong area for you because you were able to export from South America. Can you, explain a little bit more in detail how that dynamic works so that we can understand how that might benefit you?

Alberto Weisser – Chairman and Chief Executive Officer

Let me say it in a little bit different way. When you look at it from the grain point of view, normally we emphasize much more on the oil seed but in the recent months we have, the last two years we have expanded our grain business significantly so the tight supply situation in Europe with the poor production… poor crop of wheat has really given us an opportunity to operate quite well from exports from Russia but also to export germ oil free corn from South America and we also had a very good origination business from North America into different parts of the world. So this dislocation that we have seen due to the hot weather in South East Europe and also in Western Europe created this opportunity for us to take advantage and use all our network, the logistics and our grain origination business and cover the customer needs around the world but especially in Europe and Northern Africa and the Middle East. So this was the positive component on it.

Now, on the oilseeds side I would say also we were able because of our good footprint and our global reach, we were able to sail through relatively well, the shortage of the sun seed crop, so by being able to cover it but either with soy oil or with rape seed oil so I think this was a typical example. We are having the extensive network we have, the good origination need solid processing and the good distribution end, a good risk management because what happened this year and especially this quarter we had very tricky situation in terms of the commodity prices going up and down, so this altogether worked very well for us.

Christine Mccracken – Cleveland Research

Right. So, in terms of freight because you didn’t really highlight that in your comments, I am wondering, does that play in and is that more of a short term benefit if you locked in low freight cost early…

Alberto Weisser – Chairman and Chief Executive Officer

You mean, I couldn’t hear you is it freight what you mentioned.

Christine Mccracken – Cleveland Research

Yes, freight.

Alberto Weisser – Chairman and Chief Executive Officer

Yes. Freight contributed this year well as it should be normally, you remember that the comparison to last year is very favorable in freight because we had trouble last year as the old contracts from the increase in ’04,’05 expired and so from the freight point of view the delta is above normal but this year we performed quite well.

Christine Mccracken – Cleveland Research

Alright, alright. Get back in the queue.

Alberto Weisser – Chairman and Chief Executive Officer

Okay.

Operator

And we will go next to David Driscoll, Citi Investment Research.

David Driscoll - Citigroup

Great, Good morning everyone.

Alberto Weisser – Chairman and Chief Executive Officer

Good morning, David.

David Driscoll - Citigroup

Alberto, congratulations, it’s really a… truly a fantastic result, testament to you and your team and your efforts. I certainly remember a year ago how difficult the second quarter conference call was and this is a 180 degree turnaround, big home run for you guys but I think that from where I said now I almost have the opposite questions but before I start like… I was very optimistic about things to come. When I look today at these results, they are truly exceptional as you described in your prepared remarks but the question is, does exceptional mean that they will be difficult to repeat. So what I would really like you to make some comments on is… in the past you had a very clear thought process on how earnings over time should trend, in that it was very helpful to people to understand that when things were bad that they would get good again, I think you often quoted there is, there’s 15 factors and if 11 of them go right then things are right. I feel like in this quarter all 15 went right. Perhaps you could just talk to us about the long term guidance. Is 2003, still the base year from which we should grow from?

Alberto Weisser – Chairman and Chief Executive Officer

Probably I think you are right is in agri-business and in fertilizer, 15 from 15 went well, in edible oils probably only 7 from… in food products only 7 or 6 from the 15. But overall obviously the impact is very positive. I think we… when we look at the normalized earnings, or trend line however we want to call it we always mention it, ’03 was a very good base year but I think we have to realize also that we have evolved, we have grown in many areas, the grain business has increased significantly. We have added new businesses like energy, like sugar and so on,. This year I feel the way it is evolving is so we have to re look at what the base is and anyway five years is a long time.

This year, I feel the way it is evolving is probably a little bit above trend line but it’s a little early to say, the year is not over and we have to remember that this quarter, I think things went very well. We probably recuperated most if not all of our unrealized losses from the first quarter and we feel that we also have some business in the third quarter that moved from the fourth quarter to the third and so we feel it is a little bit above trend line for two reasons. We know already now that as we look into the fourth quarter and next year, we are going to have a head wind of the stronger Real as Jackie said. The Real at 180 is significantly higher than it was during the year. That’s number one, we should not forget that.

Number two is on the fertilizer situation is we have been renewing our contracts for the raw materials and these prices of the raw materials have gone up, so during ’07 we had a… we had a higher margin than we expect to have next year. So these are two concrete cases where we know that it will be more difficult, so it is a little bit early to say. We obviously have to wait for the end of the year and when we have our call at the beginning of the year, I think it is early February, we will give you a better flavor of ’08. But this we know already is a head wind and which we benefited in ’07.

In terms of agri-business it’s too early to say what has been significantly different and what we don’t expect to be next year but to cut through the chase we think this year it is a little bit above trend line.

David Driscoll - Citigroup

Alberto, thank you. I understand that you don’t have your numbers fully laid out for 2008 yet but if we could just do a rough approximation here, given what we have seen this year, can you at least tell us that you believe that next year’s earnings will actually be above that of 2007’s expected result?

Alberto Weisser – Chairman and Chief Executive Officer

It’s too early days. It’s too early, we… how it is… the fourth quarter is still a very important quarter and we do need to get through it, it’s a tricky, tricky time, we have seen the first quarter, we have seen the third quarter. We are comfortable with the whole market the way it is but it’s tricky. We need to finish first and then we will talk about it but we feel that this year is above trend line, probably we should be back at trend line next year but we feel that the overall environment is as good… as what we see for next year, it is similar good to what we are seeing this year so the general fundamentals, supply, demand, prices should be more or less with the exception of fertilizer and with the exception of stronger Real and a stronger Europe we see the market fundamentals positively.

David Driscoll - Citigroup

Thank you. Just ask one final question. I believe on the first quarter you had something like a $85 million hit from those mark-to-market inventory losses. You recovered something about $30 million in the second quarter and you just made a comment there that you recovered more than that. Can you just simply quantify for us how much of a benefit risk management activities were to third quarter numbers?

Alberto Weisser – Chairman and Chief Executive Officer

Look, we believe… we don’t follow contract by contract. That is not the way we look at it from a P&L point of view, that would be too cumbersome but our feeling is that we probably recuperated all of it. Now risk management for us is a very important component, as we move these millions of tons, when you think about our huge amount of… we have nearly 500 facilities worldwide. All these fixed costs, we have to move the products through the system. Now we have dislocations, first of all we have to buy the raw materials at the time when in often not sold yet. Also we sell flour to customers where we need not buy the raw materials, so we also have a timing dislocation. Then you have all these has to manage, we have a huge energy bill that has to be managed, the freight bill that has to be managed, the foreign exchange, the interest, so I think a very critical component of our business is risk management. Now when you think about it in terms of this quarter, probably is a little bit more than usual, the volume was higher, you saw 16% higher and also the commodity prices have been higher so the component of risk management in this quarter might have been a little bit higher than normal.

David Driscoll - Citigroup

Alberto, the only comment I will make on this is that in the periods where it was difficult, it seems as if the company was able to quantify it and given that… how the third quarter was, it would be incredibly helpful if you could quantify the upside here just so that we have a capability of trying to make a forecast. Certainly that’s what we all are going to be putting to today for ’08. How did the parent passed it on? Thank you very much. Congratulations on the quarter.

Alberto Weisser – Chairman and Chief Executive Officer

Yes. Dave, to that question. We thought about it but we had this question before but we feel that we have for example the question was about unrealized losses or gains on mark-to-market. To say in a simple way I think I said it before. Every end of the quarter, because of the way the accounting works we have to mark-to-market our positions. So, in a normal environment like every quarter, we should have always gains because what we are looking at when we get into transactions, either buying raw materials or selling forward, we are looking at gains, so therefore every quarter we basically have gains. Had we had significantly above normal mark-to-market gains this quarter like we had in the first quarter, we would have disclosed them, but we think that based on the volume and based on the prices, they are a little bit higher than normal but we think this is a… as part of the business so that’s why we don’t think we need to release them.

David Driscoll - Citigroup

Thank you very much.

Alberto Weisser – Chairman and Chief Executive Officer

Thank you, Dave.

Operator

And we will take our next question from Kenneth Zaslow, BMO Capital Markets.

Kenneth Zaslow – BMO Capital Markets

Thank you. Good morning everyone.

Alberto Weisser – Chairman and Chief Executive Officer

Good morning Kandy.

Kenneth Zaslow – BMO Capital Markets

Jackie, just a quick question. At what part of the interview process did you get an understanding of Bunge’s earnings power that this could possibly happen? And was there a point in the interview process that you actually came to this idea that maybe there was a lot more earnings power here then maybe, the rest of the world thought?

Alberto Weisser – Chairman and Chief Executive Officer

Ken, I think Jackie brought a lot of good luck as well in addition to the capabilities.

Jacqualyn Fouse – Chief Financial Officer

I don’t think I can say that there was some moment where the light bulb suddenly went on but as I got to know more about the company and saw the various aspects of the model and spent some time trying to understand what we mean by an integrated but decentralized model, then I thought about that and realized that there is a lot of potential here to be unlocked and so that’s one of the reasons why I decided to join the company, so it’s as you understand the intricacies of the model and see the potential of the times that you realize there is a benefit there. Takes a bit of time.

Kenneth Zaslow – BMO Capital Markets

And what are you thinking in terms of CapEx spending going forward. You are getting into the model and stuff like that of seeing what’s behind the scenes at Bunge, is there enough growth outlook for Bunge to be able to increase the capital spending and how do you see that going forward?

Jacqualyn Fouse – Chief Financial Officer

Well I will give you guidance I think on capital early next year in terms of some actual numbers like we did last year but the entire base is getting bigger and so we have some increases in the CapEx spending levels just because the base is getting bigger. But we are always willing to look for appropriate growth type CapEx projects that will enhance the capabilities that we have in this integrated model and if we build out the global footprint so, I think as we continue to work on efficiency in all other areas of the company that will allow us to generate the cash flow levels that we need to fund the investments that we want to do.

Kenneth Zaslow – BMO Capital Markets

It… but given the growth outlook could it be reasonable… I know, couple of years ago Bunge kind of put back it’s spending on the Fertilizer just because the environment was so bad. Would that be able to be ramped up maybe ahead of schedule now, you kind of… Bunge ramped it up then ramped it down, now we are kind of in a zone where it seems like fertilizer seems to be… there is a lot of growth. Can we start to see that there might be more capital put towards the fertilizer, even more than maybe originally anticipated?

Alberto Weisser – Chairman and Chief Executive Officer

We look at it. At the time when we looked at, for example, the mine expansions in the case of Fertilizantes, we have gone ahead with the mines that we own 100%, Arashaw [ph] and so one of them is expanded and the second one is in the middle of the expansion and we will see the benefit by the end of next year. I think the big question was the expansion of… the significant expansion of the Fusterro [ph] mine so we have put that on the back burner in the past because the economics didn’t work. At that time, with the international fertilizer prices, the commodity price and the Real, it just didn’t work. Now, it looks like it works and we probably want to make the decision by the end of the year if we start investing and opening up that mine. But that would be part of our CapEx program and included… I think we liked the discipline we have in our company in terms of limiting our CapEx, I think I have mentioned it in the past that we have significantly more projects than we have CapEx capabilities but I think it is not bad to have a limitation to stay investment grade because anyway, this also gives us the opportunity to choose the most profitable projects. So, we look at it all the time, so you have to think also in terms, when we look at the cash flow generation and the profit in the year even if it’s a little bit above normal, it is not so significantly different than we would accelerate massively our CapEx program.

Kenneth Zaslow – BMO Capital Markets

And in terms of your guidance, just to be clear, you are obviously on the net income side, went up by $60 million but if you look at the extraordinary charges and the tax rate, it sounds like you actually increased down the line, operating profit by nearly $100 million. Is that the way to think about it?

Alberto Weisser – Chairman and Chief Executive Officer

That’s correct.

Kenneth Zaslow – BMO Capital Markets

Okay and then my last question is… this year you restrained… you provided credit in a restrained manner to the farmers. If this environment continues the way we are looking right now would there be reason for us to expect that you would not loosen up your credit standards. I don’t want to say that but to the point of that you would actually… let the farmers expand the land, a little more aggressively than this year rather than being so conservative?

Alberto Weisser – Chief Executive Officer

We are looking at it all the time so I think we are happy with our strategy to be a little bit more careful. We have to remember, that you saw we even had this quarter another increase in our bad debt provision. So, they are still most people don’t realize that many farmers are still heavily indebted and they benefited already this year, so they reduced some of their debt this year. So, they had to invest again in buying inputs this year. The crop is only going to be harvested as of March of next year. So, that will be the next round. You might remember that we said might take 1-2 or even 3 years for them to be completely capitalized. So, we are very happy with the fact that we were a little bit stingier and we don’t regret it and we will continue to be like this.

As the farmers and the commodity prices stay good and they capitalize when they sell it next year we should see… that’s why we expect a nice good expansion of fertilizer next year but probably it’s more like trend line. If we are seeing this year an increase of 15% to 17% of the market we might see it going back probably more to the trend line of 6% to 7% next year.

Kenneth Zaslow – BMO Capital Markets

You also started this year at 8% as well right?

Alberto Weisser – Chief Executive Officer

You remember we started at 4% but the market was talking about complete different numbers as we said let’s be realistic. So, we were a little bit conservative and the market was a little bit too aggressive. So, we met in the middle.

Kenneth Zaslow – BMO Capital Markets

Right thank you very much.

Alberto Weisser – Chief Executive Officer

Thank you.

Operator

And we’ll take our next question from Diane Geissler with Merrill Lynch.

Diane Geissler – Merrill Lynch

Good morning.

Alberto Weisser – Chief Executive Officer

Good morning Diane.

Diane Geissler – Merrill Lynch

Congratulations on your quarter.

Alberto Weisser – Chief Executive Officer

Thank you.

Diane Geissler – Merrill Lynch

Okay, I just want to ask a volume question. You alluded to it in your comments and that here I’m really talking both on agribusiness and in fertilizer. Can you just talk a little bit about what you’re seeing on pull forward from the fourth quarter into the third quarter from the agribusiness side?

And then the fourth quarter on fertilizer will really depend to a larger extent on weather etc. and sort of… second crop, double crop there. But if you just comment a little bit on what you saw, what you think is come into the third quarter from the fourth quarter?

Alberto Weisser – Chief Executive Officer

On fertilizer, in the market in order to get to the 15% to 17% growth we see that the market growth will be something like 1 million tons less than last year. And this is for two reasons; one is last year it really exploded. It was above normal because the commodity prices went up in October, so, that’s why the farmers rushed to expand. So, it was a little bit above normal last year. Now this yea we have seen there was no anticipation in the earlier part of the year so we expect this probably as a much more normal level or perhaps a little bit lower level than what would have been normally.

I think probably on agribusiness, I don’t have an extremely good rate but we probably should stay in line with the yearly growth. Mark well check if you have a different.

Mark Haden - Investor Relations

No, I would agree with that. I think, one of the things that I think we now when we talk about things pooling into the third quarter is probably a little bit in terms of the spread of the profits just because again, we know that margins in the fertilizer business probably peaked in Q2, Q3 on a go forward basis that they’ll contract a little bit and then as Alberto mentioned on the volumes so. And there was a fair amount of volatility in Q3 as well which may have benefited the Agribusiness results a little bit more. So, if that kind of level of volatility is not there in Q4, you might expect a relatively less profit.

Diane Geissler – Merrill Lynch

Well I guess I just wondered because when I look at the volume numbers in agribusiness in the third quarter and then with the commentary about how the drought in Europe affected, you had more origination out of both South America and North America going to Europe. And some of the trade sources that we used in terms of some of the users of the product in Europe just trying to assure supply. And you were seeing big export numbers particularly on wheat, et cetera. It just makes me wonder; okay did we have something in the third quarter where there was just sort of a rush to secure supply and then maybe that trickles down in the fourth quarter.

Alberto Weisser – Chief Executive Officer

Yes what I would also add is that we clearly gained market share in grains. In oilseed we continued out path, our normal pattern but in grains as we ramped up organization, if you remember we started building it in ’05 and ’06. And so we clearly gained market share on grain. So, this is not the reflection of how the market has gone. It’s more that we have gained market share. So, I would suspect fertilizer probably flat or down and agribusiness will continue some growth but less than this quarter.

Diane Geissler – Merrill Lynch

That’s perfect. And then I guess just looking forward I know we’ve had a lot of discussions on your strategy to limit credit on the fertilizer side, not have so much expansion so that you see you kind of a big bumper crop and then prices crater. But from your comments you indicated you did give up some market share. How are you feeling about the discipline in the industry just so we don’t get into position where there is just so much of the product next spring now? We see prices pull back and then obviously that would be a negative for the Brazilian farmer with the Real, but also sort of for your business as you move into the back half of 2008.

Alberto Weisser – Chief Executive Officer

We obviously always worry but I think we have seen the discipline and I think we have seen the discipline in the market. Everybody is in a more or less the same position as Bunge is. So, you saw when you look at our legal… the accounts receivable that we have in legal contention with some of the farmers has gone up a little bit. So there are a lot of problems out there.

So, everybody is… it was probably, ’05-’06 probably was the worst crisis as far as we can see for the farmers in Brazil. So, everybody is very careful. The expansion of the… the key question is how much is going to be the expansion soybean acreage? Everything we see and we share the view of most independent analysts is around 6%. 6% is a manageable situation. We don’t see an expansion in Argentina of soybean. So, this should all be positive.

The question is, are we going to have a winter corn crop in Brazil or not; so, the drought or the lack of rains that we’ve seen so far. I think it’s starting, we’ve seen some rain now. The winter is very short for the winter corn crop in the beginning of next year. So, it’s still open that situation. But I think from the oilseed point of view, from sugarcane, from coffee and for the summer crop of corn everything should be okay.

South America, the northern plantings are going well, wheat is going well in the northern hemisphere. So, we at the moment, we don’t see any major trouble spot in the supply and demand of all of the major commodities.

Diane Geissler – Merrill Lynch

Okay and how has… just sort of moving on to China. How has demand been on meal there, soybeans used for meal there?

Alberto Weisser – Chief Executive Officer

As you remember because of the heart disease, the meal demand was down. And it has started to pick up. I think the heart disease has stabilized but oil is very strong. So what we’re seeing is a normalization of the situation. So the meal demand year over year should be up. Not as high as it used to be in the last couple of years but it should be up this year.

Diane Geissler – Merrill Lynch

Okay, well I appreciate your comments on that. I’m sure you must realize that that’s sometimes hard to get. Good information flow on that type of issue. Okay well thank you very much.

Alberto Weisser – Chief Executive Officer

Thank you, Diane.

Operator

And our next question comes from Robert Moskow from Credit Suisse.

Robert Moskow – Credit Suisse

Thank you. To be more specific about… the quarter here Alberto and Mark, in ’04 you called out a bunch of items that were positives for the calendar year ’04 that you didn’t expect to repeat and you modified your earnings base as a result of that. Doesn’t sound like you’re really calling out any items and that’s maybe some of the benefits in Q3 are offsetting the weaknesses in Q1. Did I read that right?

Alberto Weisser – Chief Executive Officer

I’m not so sure that I understood your question but I think the commentary made regarding ’03… the third quarter and fourth quarter are three points we wanted to make. We believe that there might have been some shift in the agribusiness from the fourth quarter to the third. It is really very difficult as you remember all business you have to look at on a yearly basis. And this year is again a very good example of how you have to do it. The first quarter was irrelevant when you look at it. And the third quarter being higher you have to look at it all together.

So, we do believe that some… Diane also said that there might have been some anticipation of business into the third quarter because of the worry of the type of supply, number one. Number two is that we are starting to see a diminishing in the margins and fertilizer. And so this for next year when we think about it we are going to see a lower margin fertilizer and a stronger real, and we will not be able to edge all and the farmers are going to be under pressure there.

Having said that these are the differences between Q3, Q4 and next year but overall we continue seeing that the overall environment is very solid. Was that your question?

Robert Moskow – Credit Suisse

Yeah. I called it 2004 but really it was 2003. When you’re talking about your negotiations for the raw materials for fertilizer, can you be more specific? Are you talking about, urea, nitrogen and when do those negotiations begin?

And then secondly, how long are you locked in on your ocean freight contract? Do you have to re-enter any kind of negotiations there or are you locked in for a long period of time?

Alberto Weisser – Chief Executive Officer

In terms of the raw material contracts for fertilizer, this depends… you have to add also sulfur there as a very important component and there are many others. And they are all different types of length and different moments when they have. Most of them we had already to re-negotiate. So, some of them you don’t have long term contracts some times they are three months sometimes are maximum six months. So, this is not very long.

And in terms of our ocean freight situation, it is because of the very high ocean freight rates. Obviously, how much you can lock in… is the time frames are shorter than normal. So, at the moment we are seeing shorter time frames.

Robert Moskow – Credit Suisse

Alright and then one last question, regarding cash flow from operations, you said let’s take a look at the whole year. How much of a swing should we expect in fourth quarter. When is all this cash start coming back?

Mark Haden - Investor Relations

Well… and the reason why I remind us of that is because as Alberto and all of us I think have mentioned more than once. We do have to look at the business on full year basis and not every quarter although we are very happy with the third quarter but just wanted to make sure that that’s not [inaudible] exactly that way.

It’s going to be largely dependent on what happens with what happens with commodity prices and really it’s all this type of movement to some extent in 2003 and 2004 but it went up and started to come down rather rapidly and the overall dynamics were somewhat different. The bio-fuel situation was a bit different. So, you know we’ve moved up and now we’re seeing the prices stay higher for a bit longer. So, that is one of the key things that are going to drive this. What is good is we do see at least so far the profitability moving the direction we wanted to see it move in.

Alberto Weisser – Chief Executive Officer

And the other question, the other issue is when you look at it in terms of the price as 70% if you take it as something like that. So, our whole readily available market inventories went up by probably $1.7 billion. That is directly an increase of debt. So the question is how long are the prices going to stay at this high level? We have seen already corn coming a little bit down, so wheat is coming down the last couple of days.

As these commodity prices come back to a more normal level even if they stay higher than trend lines all of this obviously immediately goes through our cash flow as a positive and it comes back, like it happened in ’03-’04.

Robert Moskow – Credit Suisse

Then if it comes down too much what happens if… let’s say we’re down to $6 a bushel again for soy and maybe the ethanol capacity expansion boom fizzles out and then that’s what drives it. How should we look at that? The positive is a lot of the cash comes back to you but I guess the negative is it again hurts the financial viability of a lot of the farmers in Brazil.

Alberto Weisser – Chief Executive Officer

We do not expect a significant… it’s very, very difficult to talk about commodity price in the future but because of the supply demand situation we do not expect a major change to this level you are talking about in the near future. Now you remember that because of the strong Real the impact to the farmer is direct. So, if it is for what reason or ever there is not going to be enough. The exchange rate is too strong like at the moment at 180. The market knows especially on the soybeans but also more and more on the corn, there is a certain level and the market realizes exactly how much it is in terms of what the farmers need. So, we have seen it in the last year as the Real was getting stronger the soybeans were going up on the CBOT and more or less in the same pattern. So there is a pretty much direct correlation between that.

So, we’re not worried too much about it. Everybody is watching the Real to see what the soybean price has to be. We are not worried about that at the moment.

Robert Moskow – Credit Suisse

Very good well thank you very much and congratulations.

Alberto Weisser – Chief Executive Officer

Thank you.

Operator

And we’ll take our next question from Christina Mcglone from Deutsche Bank.

Christina Mcglone – Deutsche Bank

Good morning.

Alberto Weisser – Chief Executive Officer

Good morning Christine.

Christina Mcglone – Deutsche Bank

Congratulations. Albert, I think there’s a sense here, on where do we go from here with these results. And I think just wanting to point out that if you haven’t increase your grain capabilities, you hadn’t increased your mining capabilities, if you didn’t build out in Eastern Europe you wouldn’t have been able to capitalize in the current situation the way you did. So I think there is definitely a benefit from the environment, absolutely but I also think that there is a benefit from your strategy. And I’m curious, how do you… like what things are you doing now to get us to the next stage of growth even if conditions environmentally are less favorable?

Alberto Weisser – Chief Executive Officer

On the big picture I think we will continue. We have a very strong; continue on the path exactly we have lined out. We see significant opportunities on expanding our integrated chain both on grain and oil seeds. On grain we still have a lot of capabilities where we can expand on oil seed as well. You also seen on the integrated chain we continue investing in Eastern Europe to made our food products capabilities stronger. In Poland we have seen investment, now we expanding also some food products in Asia so along the chain we have potential. We are going to bring on stream our Russian oil seed facility, soon also our Ukrainian one so all this is part of it. We have brought on stream also our revitalized or the new crushing facility in Spain and Cartagena and we are revamping our Romanian, Hungarian also Bulgarian facilities so we continue working on this… on this to strengthen and grow our business with now also our energy theme that we have hired this years making significant positive contribution to manage our risk in this area. Now a new area that we added to the portfolio is the sugar business. We started trading last year, this year we have our first mill. I am sure sooner or later you will hear about us as we get more comfortable and we have the team in place that we will start doing a green field here and there so there are… we see enough opportunities there that we will continue making the whole integrated chain stronger and bigger

Christina Mcglone – Deutsche Bank

Okay, thank you. I guess in terms of oil seeds it’s more in the details. Utilization has been good in North America and improved in South America and there were reports that you were going add a facility in Rondonópolis and then in North America Dreyfuss has added a facility and then ADM, Bunge, and Cargill are adding capacity next year. Do you think that we are pushing ourselves to an access surprise situation or is that supply warranted?

Alberto Weisser - Chairman and Chief Executive Officer

I think it is. In the United States Council Bluffs is probably one of the best. It is Bunge’s best plan but it is probably one of the best in the whole of North America and the market has shifted more to the west and there is a clear demand for additional meal and oil in the Council Bluff area. And not only from the western part of the U.S. but also into Mexico so there is clear demand for that but we also have remember that U.S. continues growing at around 1%, so the meal demand so it continues growing from time to time you need a little bit of expansion and we have to look from time to time also as we have done in the past that we might have to shut down one or the other plant that is not so much well located so the Council Bluff expansion is a no brainer. I don’t think it will impact at all margins in North America. The same is valid for too expansion in Canada, Nipawin and Hamilton so we see this is a completely following the market trends.

Now in the case of Brazil I think that on the Rondonopolis we had expanded it in the past because of the market and we also have expanded the refinery which in reality was a shifting and closing in one area and moving it to there. I think that was probably a wrong or an old news, what we are doing is, we are working on a new plant this is old news in [inaudible] so it is North of Rondonopolis together with a biodiesel plant which is going to be built by one of our partners a local farmer so this is in the final planning phase and its not exactly new news but it is also following the market because the meat production has gone North. The meat production in Brazil has been expanding not only domestically but also for exports so we are following our customers. This is probably nothing going to be exported, most of this business if not immediately but in the near future will all be sold domestically.

Christina Mcglone – Deutsche Bank

Okay and last question. I think with commodity prices so high do you think there is a check in thinking in industry participants that they really… when you look at the floating price margin you should be charging more for the cost of the deal in terms of capital, rather than just being in step but actually put in sort of a cost of using the capital for the time you are holding on to that bean. I don’t know if that question is clear.

Alberto Weisser - Chairman and Chief Executive Officer

I understood you correctly is we measure all of our businesses on returns of capital we call it RONA so if the working capital goes up because the prices are up we need to earn more money for this so it has to cover or we also look at on the net present value so the financing costs going up or the commodity price going up means we need higher returns and we probably could. I believe also we benefited a little bit that this environment of very high commodity prices that perhaps some of the local players or the weaker players did not participate. It’s one of the explanation why we had an expansion of our market share, but we meet higher returns. So, I think the whole industry is in the same way we have to cove all costs.

Christina Mcglone – Deutsche Bank

Okay. Thank you.

Operator

And we take our next question from Vincent Andrews with Morgan Stanley.

Vincent Andrews - Morgan Stanley

Good morning everyone.

Alberto Weisser - Chairman and Chief Executive Officer

Good morning Vincent.

Vincent Andrews - Morgan Stanley

Most of my questions have been answered, but maybe a couple of quick one. Just as we think about next year and acreage expansion in Brazil, in particular soybeans, how do you think about or how should we think about the USDA has come out and side that there will only be 87 million planted acres of corn next year versus 93 this year and that acreage is likely to go back to soybeans. I mean how should we think about that affecting, what goes on in Brazil from a planting prospective, will it make an impact at all?

Alberto Weisser - Chairman and Chief Executive Officer

I believe that the market I reading it correctly that there is… we had these shortfall also from sun flower in Eastern Europe, the palm plantations from Southeast Asia didn’t grow as fast as expected. The rapeseed, these are very heavily in oils. They did not grow as expected. And so, the view that we see also from the view that USDA is saying this is a very normal view everything is in balance the market is more trying to be more imbalanced at the kind of levels we are seeing on pricing we are not seeing at any excessive growth like we saw in sugar we are not seeing any aberration there.

Vincent Andrews - Morgan Stanley

Okay. Thank you very much.

Alberto Weisser - Chairman and Chief Executive Officer

You are welcome.

Operator

And our next question comes from Pablo Zuanic from JP Morgan.

Pablo Zuanic - JP Morgan

Good morning everyone,

Alberto Weisser - Chairman and Chief Executive Officer

Good morning, Pablo.

Pablo Zuanic - JP Morgan

I guess my question is very specific when I look at you agribusiness division I realize that you and like ADM that splits the oilseed crushing earning from the ex services earnings. You put them together. But it would help if you tell us for example of this 366 million in EBIT how much is really from crushing and how much was from ex services and of the delta on a year-on-year and quarter-over-quarter about $250 million in EBIT, how much was really from oilseed crushing and how much from ex services any, any color there would help.

Alberto Weisser - Chairman and Chief Executive Officer

We don’t do it because we don’t look at the business like that the way we look at the business is we have the basic flow first of the oil seed we have the grain origination which means not only corn and wheat but also soybean grain so this is part of the chain then we process it then we distribute it to the destination we see that is one chain in addition to that because we have all this infrastructure we lay over it we lay the grain business, in addition to that we also lay our trade structure finance we have to lay our freight we have to lay our energy. This is so integrated it is very difficult to separate that, that is why the way we have manage it internally is like that so don’t separate it, the way perhaps others do.

Pablo Zuanic - JP Morgan

Okay. I understand but then if we look at just oilseed crushing margins from on a global basis for Bunge, how much do they change, do they change by 10 basis points, 50 basis points year-on-tear, just roughly on the crashing side.

Alberto Weisser - Chairman and Chief Executive Officer

They were better than last year. The crushing margins are good around the world they were good in North America, they were good in Europe obviously there were spots where there were less supply. South America, they good. For us it is not that relevant in China, there were some issues about the crush margins because of the lack of demand on meal. But overall, the crush environment is better than last year.

Pablo Zuanic - JP Morgan

Okay. But your EBIT margins year-on-year went from 2.3% to 3.8% would you say that in crashing your margins also went up by 150--?

Alberto Weisser - Chairman and Chief Executive Officer

Probably not by that much. When I looked at it we had a freight side we had tail end of our old contract last year so the freight is contributing more crane is contributing more so probably the contribution from the oil seed is not increased the increase is not as much as others.

Pablo Zuanic - JP Morgan

Okay. Can I just follow-up, when we think of capacity, I am just trying to consider how to increase capacity on their services side and you touched only before partly but you have been more elevators, you have more pure contacts, you have more buyers, how does that work on, there has to be a limit I suppose, you just cant understand that far better?

Alberto Weisser - Chairman and Chief Executive Officer

In North America, we have not expanded at all we have the only, the only difference that we have signed long term contracts for example Iowa with the partner of ours, which is agro services so we have complete new origination system without having to do invest. Well we have just working with the partner together, so we have more access to the grain. Now, in Eastern Europe, it was a mixture we bought from silos but last we didn’t buy any so they all were bought in a all ’06 ‘05 in Ukraine and Russia. And but the key one here was building a team so we hired a team, so the investment is more in personal expenses. We also have to put through agreement in the port of Illichech [ph], we build a terminal in Latvia and we bought the terminal in Ostov [ph] Russia, but this all was done in the past this year we didn’t expend at all, so what we are doing now is first filling our infrastructure and using our overhead from what we have. And the growth from now on should be more normal. And in South America, in fact, because of the… in the past some of the farmers were more kept alive, in fact, we reduced somewhat our silos. So, our capital intensity in Brazil in terms of silos was somewhat reduced. We did not expand our grain origination… we think we used all of our soybean origination to do corn. So, it is really a question of what happened to this year, is much more about efficiency. Probably, we will slightly reduce our asset base in grain origination in the world, but expand it a little bit on team, but all the additional volume was more about efficiency.

Pablo Zuanic - JP Morgan

That’s very useful, and I appreciate that. And just a follow-up if I may. On the fertilizer size, you made comments on pricing. But the way I think about it if year-on-year dollar fertilizer prices on the global basis are higher than in ’07 that could more than offset the exchange issue, right? I mean on the important component you make a steady spread, but on local component when dollar prices are high that saves margin in that business, of course, even if you have exchange rate issue.

Alberto Weisser - Chairman and Chief Executive Officer

Yes, the key point for us is the margin between international prices of fertilizer and the raw materials. What has happened is that the raw material sold for nitrogen, urea, all of these potash, all of these raw materials that we don’t have they went up… they probably went up now higher than the international prices of fertilizer went. So, there is where our margins contracted. The strong area always all our… all our expenses also went up and somewhat of that we have hedges but it is not perfect. So, we probably cannot hedge all of that. So, there is clearly a contraction on the margins side looking forward.

Pablo Zuanic - JP Morgan

For me, just one, last one. Going back to our services, if in very simplistic terms, I think what I said I think it is a trading business. You have to make decisions about capital allocation to that business. Is there a limit to how much you allocate to that business… I suppose how should we think about that? I mean it seems like you hit a wall at some point with all these growth or there is no limit?

Alberto Weisser - Chairman and Chief Executive Officer

We see… when you think about that global demand of soybean meal, vegetable oil, corn is growing at around 3%, 4%, 5%. So, somebody has to deliver to feed the population around the world. So, when you look at our volume growth in the guidance… the long-term guidance, it is… we think it is on the on the agribusiness business is 6% to 8%. So, we believe that what we are doing is, by being positioned in growth areas like in South America and in Eastern Europe, by just keeping our market share in this areas, to continue feeding… helping feeding the world, we will continue to growing. Obviously, there are moments where you have to expand more on assets like we did before and there are moments where you have to work on expansion of the team, and there are moments where you just consolidate. I think we are, at the moment, are little bit in a phase where we are consolidating more on… using our investments in ports, using our investments in silos and the investments in people and just making the whole system work more efficient. But we probably will see and sooner or later, we will start seeing little expansions here and there as well.

Pablo Zuanic - JP Morgan

Thank you. It’s very helpful.

Alberto Weisser - Chairman and Chief Executive Officer

Thank you.

Operator

And we will take a follow-up question from Christine McCracken at Cleveland Research.

Christine McCracken - Cleveland Research

Yes, just a quick follow-up. Alberto, you talked about your ongoing commitment to expand into sugar, and yet, we have seen a pretty deep drop off in ethanol prices in Brazil. And from what we understand, it's in part tied to Brazil’s inability to export to the U.S. and that countries build out of ethanol capacity. Does that create opportunities for you? You talked about Greenfield, but at the same time, it seems like some of these that should be under some pressure?

Alberto Weisser - Chairman and Chief Executive Officer

Yes. There is pressure on sugar both from ethanol and from the sugar prices, because of the high production in India. And our view is a long-term view. And we never look too much at the situation of these very high margins that were out there. But to be very honest, we like the environment the way it is. This is a much more natural environment with normal prices, even if they are perhaps a little bit low on sugar. But this makes the whole expansion program in the sugar and ethanol business in Brazil also more rational. We just have to think about… looking at what Brazil will have to export more in terms of sugar. The global sugar market is growing at 3% per annum worldwide. So, others will contribute India, Thailand, but significant amount will have to come from Brazil. So, as we look over the next 10 years, the capacity of sugar production will have to double. So, from the 400 mills we see today, it will have to go another 400 mills, will have to be build. And just to continue the expansion of sugar and the domestic Brazilian ethanol program. So, I would consider the export component of ethanol is more is the icing on the cake than the real drive off this demand situation.

Christine McCracken - Cleveland Research

Have you seen a drop actually in prices for some for these mills in Brazil? Or how does that market looks now?

Alberto Weisser - Chairman and Chief Executive Officer

You mean a drop for what?

Christine McCracken - Cleveland Research

For the prices of the mills… if the competitive market… has the competition for those mills. Alternative mills, has that price come down or are there--?

Alberto Weisser - Chairman and Chief Executive Officer

The only thing that you are seeing that no more deals are happening. So, I think the expectation of the sellers and the buyers have now gotten to a point where there is no agreement any more. And I think this will probably take some time until this converges. I always like to remind people that we have these major crises in China in 2004, and we were only really able to buy assets at reasonable values the end of ’05, beginning in ’06. It takes some time until the sell of those assets realized that they have to address to a new environment. I think it will take more time until… reduced the price expectations.

Christine McCracken - Cleveland Research

And then, just one another quick follow-up on biodiesel. We saw this week a pretty significant player in Europe actually shutdown. And I am wondering, can you give us a little more color on that market or how you see the biodiesel market evolving those things some I guess criticism of the U. S. policy of bringing biodiesel into the U.S. and re-export against Europe. Can you talk about that environment and how that effects your participation?

Alberto Weisser - Chairman and Chief Executive Officer

Yes, I think that is correct, that the margins are really under pressure not only in Europe, but also here in the U.S. And so, you do not see anymore the expansion that we were seeing before. And even some of then are not operating. So… but at the moment, the margins are above variable cost. So, most of the people… most of the players are operating somewhat some, obviously, there is also issue of access to the rapeseed oil and so on. And the European biodiesel players are obviously complaining about these kind of loophole in the case of U.S. I think the biggest complain is that… not the U.S. biodiesel is being imported, but some biodiesel is being imported into the U.S. added 1% and re-export it. So, this is the biggest distorting factor that is going on in the biodiesel business. But I think what we are seeing at the moment is an accommodation of the industry. We still see… we are expanding… we are building… we are minority investor, but we are building two biodiesel plans in U.S. So, there is a business rational. We have seen also in Brussels the government continues to have this kind of soft mandate so they want to continue the detection system in Europe. So, the business logic for the biodiesel is there. But we are not going to… probably not going to see soon these very high margins that were out there. So, we are comfortable with our strategy of only being a minority investor in different parts of the world. So, we are… with our partner, we are building the facility Bilbao Spain. We are also building with a partner a facility in Argentina. These are all very logical moves. But you saw, at the moment, we have not billed anyone in Brazil, because we did not see how it work… would work. So, the biodiesel… there is an accommodation is going on in the biodiesel sector. So, it will be a little bit under stress as the vegetable oil prices are so high.

Christine McCracken - Cleveland Research

And then you had mentioned I guess in your statements that these freight rates are still rising. Is there an opportunity I guess knowing that more pricing is coming to book some of that freight in advance? Or is it… that is so far out… or the market has already flatness price down?

Alberto Weisser - Chairman and Chief Executive Officer

We look to the… for us the freight is really much more about to manage the risk, because we are responsible… at the end, we invoice this to our customers around the world. And our customers are clearly not happy with the high freight rate. So… and… so, it is… I think the long-term view on freight or the long-term contracts on freight. They are not really that much available out there, because everybody is worried about the high price.

Christine McCracken - Cleveland Research

All right. Thanks.

Alberto Weisser - Chairman and Chief Executive Officer

Thank you.

Operator

And we will take a follow-up question from Ken Zaslow, BMO Capital Markets.

Kenneth Zaslow - BMO Capital Markets

Hey, just a quick follow-up. Who did you gain market share in the grants from the large players or small guys?

Alberto Weisser - Chairman and Chief Executive Officer

Clearly, from the small players… the regional smaller players.

Kenneth Zaslow - BMO Capital Markets

And the large probably traded company would not have been effective?

Alberto Weisser - Chairman and Chief Executive Officer

I don’t think so.

Kenneth Zaslow - BMO Capital Markets

Great. I appreciate it.

Alberto Weisser - Chairman and Chief Executive Officer

Thank you.

Operator

And we will take a follow-up question from David Driscoll, Citi Investment.

David Driscoll - Citigroup Investment

Great. Thanks a lot. I make it quick. Alberto, with U.S. corn inventories projected at just approximately 2.0 billion bushels, do you think that… what is your opinion or what’s Bunge's opinion on the outlook for corn pricing? Do you think it should hold in there, in those future markets that at roughly $4 bushel? Or do you potentially see that… it might be lower?

Alberto Weisser - Chairman and Chief Executive Officer

We don’t have a strong opinion there. We look much more at the volume, the supply demand, because we always hedging ourselves, so we don’t look too much of it. We look at the pricing much more from a farm economics point of view, and I to be honest, I don’t know what our internal view is on that price… on that price level.

David Driscoll - Citigroup Investment

Maybe just a second question here on the… on the whole U.S. ethanol side. So, obviously, you have been clear about your sugar base ethanol strategy in Brazil. Given a reduction in assets prices for U.S. ethanol, is it something that you considered to look at acquisitions of U.S. corn ethanol?

Alberto Weisser - Chairman and Chief Executive Officer

Look, we don’t like too much to talk. At the moment, our view is clearly that we will work with all our partners, and we work with… as a very selective in… as a minority investor. But if the facts change, we will have a different look. I didn’t’ do any homework yet, to be honest on my side.

David Driscoll - Citigroup Investment

Very good. Thank you very much.

Alberto Weisser - Chairman and Chief Executive Officer

Thank you.

Operator

And at this, I would like to turn the conference back over to you Mr. Haden for any additional or closing remarks.

Mark Haden - Investor Relations

Well, thank you, and thanks everyone for joining us today. We will see you next quarter.

Operator

And once, again, that does conclude today’s conference call. We do thank you for your participation. You may disconnect at this time.

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Source: Bunge Ltd. Q3 2007 Earnings Call Transcript
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