Management Report 2020

Management Report 2020 Hedge position Currency and agricultural commodity hedge. SLC Agrícola The company's sales revenue is generated mainly from the sale of ag- ricultural commodities, such as cotton, soybean and corn, which are quoted in U.S. dollar on the foreign exchanges Chicago Board of Trade (CBOT) and Intercontinental Exchange Futures US (ICE). Therefore, we are actively exposed to variations in foreign exchange rates and in the prices of these commodities. To protect from currency variation we use derivative instruments, with the portfolio of these instruments basically comprising non-deliverable forwards (NDFs). In line with the Company's Risk Management Policy, whose purpose is to obtain a pre-established Adjusted EBITDA margin with a combination of factors such as Price, Foreign Exchange and Cost, most of the instruments for protecting against commodity price varia- tion are accomplished through advanced sales directly with our clients (forward contracts). We also use futures and options contracts negoti- ated on the exchange and swap and option transactions contracted with financial institutions. The mark-to-market adjustments of future, swap and option transactions are recorded under financial income (ex- pense). The hedge position for commodities (in relation to the estimated total volume invoiced) and currency (in relation to the total estimated reve- nue in U.S. Dollar) is shown below, broken down by commercial hedge and financial hedge and updated as of March 15. 46 46

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