Q3 2007 BUNGE LIMITED Earnings Conference Call on Oct. 25

FINAL TRANSCRIPT

BG - Q3 2007 BUNGE LIMITED Earnings Conference Call

Event Date/Time: Oct. 25. 2007 / 10:00AM ET

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CORPORATE PARTICIPANTS Mark Haden BUNGE LIMITED - Director IR Alberto Weisser BUNGE LIMITED - Chairman, CEO Jacqualyn Fouse BUNGE LIMITED - CFO

CONFERENCE CALL PARTICIPANTS Christine McCracken Cleveland Research - Analyst David Driscoll Citi Investment Research - Analyst Ken Zaslow BMO Capital Markets - Analyst Diane Geissler Merrill Lynch - Analyst Robert Moskow Credit Suisse - Analyst Christina McGlone Deutsche Bank - Analyst Vincent Andrews Morgan Stanley - Analyst Pablo Zuanic JPMorgan - Analyst

PRESENTATION Operator Good day, everyone. Welcome to Bunge Limited's 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 - BUNGE LIMITED - Director IR Thank you, Bill and thank you everyone for joining us this morning. Welcome to Bunge Limited's 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. It can be found in the investor information section of our website, www.bunge.com. Under investor presentations. With me today to discuss our results are Alberto Weisser, Bunge's Chairman and CEO and Jackie Fouse, Bunge's Chief Financial Officer. The reconciliations of non-GAAP measures disclosed orally on this conference call to the most directly comparable GAAP financial measure are posted on the website on 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

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© 2007 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Oct. 25. 2007 / 10:00AM, BG - Q3 2007 BUNGE LIMITED Earnings Conference Call 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. Now let me turn the call over to Alberto.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Good morning, everyone. Bunge's third quarter results were exceptional. Agribusiness operations improved across the board and fertilizer continues to perform strongly. In the third quarter, our oil-seed processing, grain origination and distribution businesses performed well across the variety of regions and commodities. This performance was a result of the graphic footprint and product portfolio that we have built in recent years, as good risk management decisions in the dynamic market.

Take our grain and distribution businesses, for example. Which were particularly stand outs this quarter. Production shortfalls in some key consumption markets such as Europe provided opportunities for greater volume of exports with a variety of grains from our operations and 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 agribusiness. Having an integrated business that stretches from farm to retail shelves 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. The 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 agribusiness and logistics activities in the region.

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

Jacqualyn Fouse - BUNGE LIMITED - CFO Thank you, Alberto. Good morning, everyone. Thank you for being on the call this morning. I would just remind you, as Mark mentioned, that there are some slides on the webcast so that you can follow along with the comments that I will 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 had volume increases of 16%. So over 37 million tons in the quarter and all segment his double digit volume growth in the quarter with the exception of fertilizer. A result for that segment which was anticipated, and we'll talk about the segment specific results in just a moment.

Operating profits grew over 200% in the quarter and drove net income and EPS growth. Growth in net income and EPS in a relative sense and a percentage sense were 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 higher variable costs due to higher volumes, a little bit of currency and some spending to continue to build our food business locally and a few other miscellaneous expenses.

Turning to the segment-specific results, when we look at agribusiness, all regions showed improvement as did the business lines, volume growth for the quarter was at 19% and I would highlight Europe and South American grain origination and oil-seed processing where margins were higher. We had 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 as we demonstrated an ability to manage volatility in shifts in global trade flows as well as leverage our global footprint and our integrated model. Everything aligned very nicely in agribusiness during the quarter.

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In the fertilizer business, total volume was down 1%, the retail business was up and nutrients were down. We experienced a little bit of market share loss in the quarter due to our focusing on farmer credit and on higher margin sale of business. Margins in fertilizer continue to benefit from higher international prices and ocean freight rates. With effects to food products and edible oils, the results have been affected by higher SG&A's due to continuing to invest in this business to build it out especially in Europe and Asia. We also continue to see high inventories in the U.S. and high raw material prices in Europe. So it remains an difficult environment for oil but we do have an improving outlook for that business and we'll talk about that later when we cover the outlook. In corn milling, the results benefited from higher volume and improved product mix.

A few highlights from the balance sheet. Our operating working capital for September 30, 2007, compared to September 30, 2006, grew about 35%. Driven by inventory growth of 64% with the readily marketable component of that growing by 73% and as you're very familiar with, that is all due to higher commodity prices, as well as higher volume levels. And just to give you some reference points, when we look at September 30, '07, versus September 30, '06, the CBO slot and CBOT slot prices, soybeans are up 81%; corn, 42% and wheat, 112%. So the inventory increase has to be put into that context.

At the same time that we see the growth, we also saw working capital efficiency improve in the quarter and we measured ourselves by a cash cycle calculation that we do on a 12-month rolling basis and we've seen a several-day improvement in the cash cycle, which gives us confidence in what we're doing with respect to working capital efficiency. Total debt grew by 27%, so it's lower than working capital growth. Again, over this same period, and shareholders equity is up by 42%. That is -- you can see that we continue to strengthen the balance sheet.

With respect to cash flows, funds from operations and those are before working capitol changes were very solid for the quarter, under $500 million, driven by the strong profits, we saw improvement ind working capital and some results from our working capital efficiency in a relative sense. As I motioned, our cash cycle has improved and we have seen a flowing in the rate of increase of working capital. Working capital still go did go up in the quarter and for the 9 months ended, it's 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 changes for the quarter were positive and -- quarter were positive and we're very happy with that . That it remains negative for the 9 months again because the working capital increases and we remind everyone that we do have seasonal volatility in our quarter numbers and the business is best with that on a full-year basis.

Turning 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're seeing right now, U.S. harvests are looking good. We anticipate higher crop plantings in South America and the most recent USDA global forecast for growth in soybean meal and vegetable oil indicates respectively 6% and 4% for the 2007, 2008 cycle rates which are slightly ahead of the '06, '07 cycle. We continue to see a good farm economics and those should support continued goods demands for fertilizer.

With respect to our specific financial guidance for the 2007 full-year, we have increased that guidance by $60 million for net income to range with $690 million to $710 million or $5.31 to $5.46 per share. That incorporates a weighted average number of shares outstanding of about $130 million and it also includes an effective tax rate estimate of 24 to 28%. Which is up from the last range that we gave you of 18 to 22% as we are earning 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, I would say that the agribusiness basically fired on all cylinders and produced stellar results in the third quarter. With our diversified geographic and product portfolio, we might normally expect to not always have all the stars aligned almost perfectly as they did this quarter, so usually it would have some puts and takes in that diversified portfolio and really, an exceptional quarter for agribusiness and fertilizer, best quarter for the year, has had an exceptional year in terms of overall segments dynamics. It's performing above its trend line.

We've benefited from above average volume growth, favorable input prices, high margins, high freight rates and foods, we've somewhat underperformed, versus where we would like to be. The outlook in that business is improving. We have also seen the real strengthen and we move into through the rest of the year and into 2008 as we mentioned, a very good sector of

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With that, I think we'll open it up to questions and answers.

QUESTIONS AND ANSWERS Operator (OPERATOR INSTRUCTIONS). The first question comes from Christine McCracken, Cleveland Research.

Christine McCracken - Cleveland Research - Analyst Morning.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Good morning, Christine.

Christine McCracken - Cleveland Research - Analyst Congratulations on a fantastic quarter. Just wanted to touch a little bit more, get more detail around Europe. It seems like that area is has obviously been effected quite heavily by drought this year and yet, you noted that it was a strong area because you were able to export from South America. Can you explain more in detail how that dynamic works so that we can understand how that might benefit you.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Yes. Let me say it in a different way. When you look at the grain point of view. Normally we emphasize much more on the oilseed, but in the recent months, we have, the last few years, we have expanded our grain business significantly so the tight supply situation in Europe was a poor production, poor crop of wheat that has really given us an opportunity to operate quite well from exports from Russia but also to export GMO-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 Southeast Europe and also in Western Europe created this opportunity for us to take advantage and use all of our network, the logistics and 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 oilseed side, I would say also we were able, because of our good footprints and our global reach, we were able to sail through a relatively well shortage of the sunseed crop. So, by being able to cover either with soy oil or with rapeseed oil. I think this was a typical example where having the extensive network we have, the good origination, solid processing and the good distribution end and good risk management. What happens this year, especially this quarter, we had a very tricky situation in terms of the commodity prices going up and down. So, this all together worked very well for us.

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Christine McCracken - Cleveland Research - Analyst 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 costs early?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO You mean -- I couldn't hear you is it freight?

Christine McCracken - Cleveland Research - Analyst Yes, sorry.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Freight contributed this year well as it should be normally. You remember the comparison to last year is favorable in freight because we had trouble last year as the old contracts from the increase in '04 and '05 expired. From a freight form of view, the delta is above normal but this year we performed quite well.

Christine McCracken - Cleveland Research - Analyst All right, I'll get back in the queue.

Operator We'll go next to David Driscoll, Citi Investment Research.

David Driscoll - Citi Investment Research - Analyst Good morning, everyone.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Good morning, David.

David Driscoll - Citi Investment Research - Analyst Alberto, congratulations. This is a fantastic result, a testament to you and your team and your effort. I certainly remember a year ago how difficult the second quarter conference call was. This is a 180-degree turn around big home run for you guys.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you.

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David Driscoll - Citi Investment Research - Analyst I think from where I sit now, I almost have the opposite questions. Before I felt like I was very optimistic about things to come. When I look today at these results, they are exceptional as you described in your prepared remarks, but the question is, does exceptional mean they'll be difficult to repeat? I really would like to you make comments on is in the past you have had a very clear thought process on how earnings over time should trend and that it was very helpful to people to understand that when things were bad, they would get good again and I think you often quoted there is 15 factors and if 11 of them go right, then things are right, I feel in this quarter, all 15 went right. Perhaps you could talk to us about the long-term guidance. Is 2003 still the base year from which we should grow from?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Probably I think you are right. In agribusiness and in fertilizer 15 from 15 went well and in edible oils, probably only 7 from oil, and then food products, only 7 or 6 from the 15. Overall, the impact is very positive. I think when we look at the normalized earnings or trend line, however we want to call it, we always mention that '03 was a very good base year. I think we have to realize also that we have evolved and we have grown in many areas. The whole grain business increased significantly. We have added new businesses like energy and sugar and so on. We have to look at what the base is. Five years is a long time. This year I feel the way it's evolving is probably a little bit above the trend line and it's a little bit early to say. The year's not over and we have to remember that in 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 that it's 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 the headwind of the stronger real as Jackie said. The real at 180 is significantly higher than it was during the year. That is number one. We should not forget that. Number two is the -- on the fertilizer situation, as we have been renewing our contracts for the raw materials, and these prices are the raw materials have gone up. So during '07 we had a higher margin than we expect to have next year.

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 and we will get a better flavor of '08. But this we know already as a headwind, which we have benefited in '07. In terms of agribusiness, 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 we -- it's a little bit above trend line.

David Driscoll - Citi Investment Research - Analyst I understand that you don't have laid out for 2008, yet, but if we could do a rough approximation, what we have seen this year, can you tell us if you believe that next year's earnings would actually be above that of 2007's expected result?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO It's too early. The fourth quarter is still a very important quarter and we do need to get through it. It's a 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. It's tricky. We need to finish first and then we will talk about it. We feel that this year is above trend line, probably we should be back in trend line next year but we feel the overall environment is as good, as what we see for next year, it's similar good to what we are seeing this year. The general fundamental, supply, demands, prices, should be more or less with the exception of fertilizer and with the exception of a stronger real and the stronger Euro. We see the market fundamentals positively.

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David Driscoll - Citi Investment Research - Analyst Thank you, one final question. I believe on the first quarter you had something like an $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 - BUNGE LIMITED - Chairman, CEO 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 vow. That would be too cumbersome. Our feeling is we probably recuperated all of it. Risk management for us is a very important component. When you think about a huge amount of -- we have nearly 500 facilities worldwide, all of these fixed costs, we have to move the products through the system. Now, we have this locations. First of all, we buy, we have to buy the raw materials at the time when they often are not sold yet.

Also, we sell forward to customers where we didn't even buy the raw materials so we also have a timing dislocation. Then you have -- all of this has to managed. We have a huge energy bill that has to be managed. The freight bill that has to be managed. The foreign exchange, interest. I think a critical component of our business is risk management. Now, when you think about it in terms of this quarter, probably is a little more than usual. The volume was higher, you saw 16% higher and also the commodity prices have been higher. The component of risk management in this quarter might have been higher than normal.

David Driscoll - Citi Investment Research - Analyst Alberto, the only comment I would make on this is in the periods where it was difficult, it seems as if the company was able to quantify it and given the how good this third quarter was, it would have -- it would be incredibly helpful if you could quantify the upside here just so we have the capability of trying to make a forecast. Certainly that's what we're all going to be put into today for '08 and I will leave it there and pass it on. Thank you very much, congratulations on the quarter.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Dave to that question, we thought about it. We had this question before and we feel that we have, for example, the question was about unrealized losses or gains on mark-to-market, and to see it 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 the normal environment like every quarter, we should have always gains. Because what we're 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 had disclosed them. But we think that based on the volume and based on the prices, they are a little bit higher than normal and we think this is a -- this part of the business. That is why we don't think we need to release them.

David Driscoll - Citi Investment Research - Analyst Thank you very much.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you, Dave.

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Operator We'll take our next question from Kenneth Zaslow, BMO Capital Markets.

Ken Zaslow - BMO Capital Markets - Analyst Good morning, everyone.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Good morning, Ken.

Ken Zaslow - BMO Capital Markets - Analyst Jackie, a quick question. At what part of the interview process did you get an understanding of Bunge's earnings power to think that this could possibly happen? Was there a point in the interview process that you actually came to this idea that there was a lot more earnings power here than maybe, the rest of the world thought?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Ken, I think Jacque brought a lot of good luck as well, in addition to the capabilities.

Jacqualyn Fouse - BUNGE LIMITED - CFO 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 it -- I thought about that and realized there is a lot of potential here to be unlocked and so that is one of the reasons why I decided to join the company. It's as you understand the intricacies of the model and see that potential all the time they think you realize there is a benefit there.

Ken Zaslow - BMO Capital Markets - Analyst And what are you thinking in terms of Cap Ex spending going forward? Now you kind of are getting your -- getting into the model and stuff like that, seeing what is behind the scenes of 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 - BUNGE LIMITED - CFO Well, I will give you guidance, I think, on capital early next year in terms of the actual numbers like we did last year, but the entire base is getting bigger. We'll have increases in the Cap Ex spending levels because the base is getting bigger. But we're always going to look for appropriate growth high CapEx and that will enhance the capabilities that we have in this integrated model and as we build out the global footprints. I think as we continue to work on the efficiency in all of the 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.

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Ken Zaslow - BMO Capital Markets - Analyst Given the growth outlook, could it be reasonable -- I know a couple of years ago Bunge kind of put back its spending on the fertilizer because the environment was so bad. Would that able to be ramped up ahead of schedule now? You kind of -- Bunge ramped it up and down and now we're kind of in the zone where it seems like fertilizer seems to be a lot of growth. Can we start to see there might be more capital put toward the fertilizer than originally anticipated?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO 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 minds that we own 100% [ala Shaw], and so one of them is expanded and the second one 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 [Forsanthril] mine. 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 and the commodity price and the Real, it just didn't work. It looks like it works and we want to probably make the decisions by the end of the year if we would start investing and opening up that mine. But that would be part of our Cap Ex program and included, I think we like the discipline we have in our company in terms of limiting our Cap Ex. I think I have mentioned it in the past that we have significantly more projects than we have Cap Ex capabilities. But I think it's not bad to have a limitation to stay investment grade because anyway, this also gives us the opportunity to choose the most profitable projects. And 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, if it's a little above normal, it's not so significantly different than we would accelerate massively our CapEx program.

Ken Zaslow - BMO Capital Markets - Analyst In terms of your guidance to be clear, obviously on the net income side, it went up by $60 million. But if you look at the extraordinary charges and tax rate, sounds like you increased the underlying operating profit by nearly $100 million. Is that the way to think about it?

Jacqualyn Fouse - BUNGE LIMITED - CFO That is correct.

Ken Zaslow - BMO Capital Markets - Analyst Okay. And 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're looking right now, would there be reason to us to expect that you would not loosen up your credit standards, I don't want to say that, but to the point that you would actually, let the farmers expend the land a little bit more aggressively this year rather than being so conservative.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO We are looking at it all the time, so I think we were happy with our strategy to be more careful and you have to remember we saw that, we even had this quarter another increase in the bad debt provision and they're still, most people don't realize that many farmers are still heavily indebted and they benefited already this year so they reduced some of the debt this year but the -- 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 and that will be the next round. You might remember that we said it might take one, two or three years for them to be completely kept alive. We're very happy with the fact that we were a little bit stingier and we, we don't regret it and we will continue to be like this.

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As the farmers and the commodity prices stay good and they get capitalized when they sell it next year and we should see, that is why we expect a nice good expansion of fertilizer next year and probably more like trend line. If we're seeing this year the increase of 15% to 17% over the market, we might see it going back probably more to the trend line of 6% to 7% next year. You started this year at 8% as well, right? Yes,You remember, we started at 4, but the market was talking about completely different numbers. We said let's be realistic so we were a little conservative and the market was a little bit too aggressive. So we met in the middle.

Ken Zaslow - BMO Capital Markets - Analyst Right, thank you very much.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you.

Operator And we'll take our next question from Diane Geissler, Merrill Lynch.

Diane Geissler - Merrill Lynch - Analyst Good morning.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Good morning, Diane.

Diane Geissler - Merrill Lynch - Analyst Congratulations on your quarter.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you.

Diane Geissler - Merrill Lynch - Analyst Hey, I just want to ask a volume question. You alluded to it in your comments and here I'm talking more about agribusiness than on 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 I guess the fourth quarter on fertilizer would really depend on a large extent on weather, you know, a second crop, double crop there. But if you could comment a little bit on what you saw, what you think comes into the third quarter from the fourth quarter?

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Alberto Weisser - BUNGE LIMITED - Chairman, CEO On fertilizer, in the market in order to get to the 15 to 17% growth, we see that the market will be something like 1 million tons less than last year.

Diane Geissler - Merrill Lynch - Analyst Yes.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO 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 and that is why the farmers rushed to expand. It was a little above normal last year. Now this year, we had -- there was more anticipation into the earlier part of the year. So we expect this probably is much more normal level or perhaps a little bit lower level than would have been normally. On, I think, probably on agribusiness, I don't have an extremely good read, but we probably should stay in line with the year growth. Jackie, do you have a different?

Jacqualyn Fouse - BUNGE LIMITED - CFO No, I would agree with that. I think one of the things that I think we nailed when we talk about things pulling in to 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 are probably peaked in Q2, Q3 on a go-forward basis that they will contract a little bit and as Alberto mentioned on the volume, so there was a fair amount of volatility in Q3 as well, which may have benefited the agribusiness results a little more. So if that same level of volatility not there in Q4, don't expect a relatively less profit.

Diane Geissler - Merrill Lynch - Analyst I guess I wonder because when I look at the volume numbers in agribusiness in the third quarter and with your 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 use in terms of some of the users of the product in Europe just trying to shore supply and you have seen the export numbers particularly on wheat, et cetera.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Yes.

Diane Geissler - Merrill Lynch - Analyst Makes me wonder, okay, did we have something in the third quarter where there was a rush to secure supply and then maybe that trickles down in the fourth quarter.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Yes, what I would also add is that we clearly gained market share in grains. In oilseed, we continue our normal pattern and in grains, as we ramped up our organization, you remember, we stopped building it in '05, in '06, and so we clearly gained market share on grains. So this is not the reflection of how the market has gone. More than we gained market share. I would suspect fertilizer probably flat or down and agribusiness continues some growth but less than this quarter.

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Diane Geissler - Merrill Lynch - Analyst Okay. Perfect. And just looking forward, I know we have had a little -- a lot of discussions on your strategy to limit credit on the fertilizer side. Not have so much expansion so that you see, kind of a big bumper crop and prices crater, but from your comments, you indicated you did give up some market share. Are you -- how are you feeling about the discipline within the industry just so we don't get into a position where there is so much of the product next spring that we see prices pull back and obviously that would be a negative for the Brazilian farmer with the Real is and also for your business as you move into the back half of 2008.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO We obviously always worry but I think we have seen the discipline and I think we have seen the discipline in the market and everybody is in the, more or less in the same position as Bunge is, so you saw when you look at our -- the legal, the accounts receivable that we have in legal contention with some of the farmers has gone up a little bit, so, there is a lot of problems out there so everybody is, it was probably the '05, '06 was probably the worse crisis in, as far as we can see for the farmers in Brazil. So, everybody is very careful.

I -- the expansion of the key question is how much is going to be the expansion in 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 soy beans so this should all be positive. The question is are we going to have a winter corn crop in Brazil or not? The drought and the lack of rains we have seen so far I think is starting. We have seen some rain now and the window 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 sugar cane, from coffee and the summer crop of corn, everything should be okay. South America, the northern plantings are going well. Wheat is going well and northern hemisphere and we, at the moment, we don't see any major trouble spots. In the supply and demand of all of the major commodities.

Diane Geissler - Merrill Lynch - Analyst Okay and how has -- just sort of moving on to China, how has demand been on meal, there, soy beans used for meal there?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Yes. As you remember because of the heart disease, the meal demand was down.

Diane Geissler - Merrill Lynch - Analyst Yes.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO And it started to pick up, I think the heart disease problems have stabilized. But oil is very strong. What we're seeing is a normalization of the situation. So the meal demands year-over-year should be up not as high as it used to be in the last few years but should be up this year.

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Diane Geissler - Merrill Lynch - Analyst Okay, well I appreciate your comments on that. I am sure you must realize that it's sometimes hard to get good information flow.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Yes.

Diane Geissler - Merrill Lynch - Analyst On that type of issue.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Yes.

Diane Geissler - Merrill Lynch - Analyst Okay, well, thank you very much.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you, Diane.

Operator Our next question comes from Robert Moskow, Credit Suisse.

Robert Moskow - Credit Suisse - Analyst Thank you. To be more specific about the quarter here, Alberto, in '04, you called out a bunch of items that were positive for the calendar year '04. That you didn't expect to repeat. And as you modified your earnings base as a result of that, doesn't sound like you're calling out any items or maybe this -- that is some of the benefits in Q3 are offsetting the weaknesses in Q1. That did I read that right?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO I am not sure if I understood your question, but the two, I think, the -- regarding '03, the third quarter and fourth quarter are three points we wanted to make. We believe that the, there might have been some shift in agribusiness from the fourth quarter to the third. It's really very difficult. As you remember, all business you have to look at on the yearly basis and this year again is a very good example. 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 altogether. We do believe that some, Diane said that there might have been some anticipation of business into the third quarter because of the worry of tight supply, number one.

Number two is that we're starting to see a diminishing in the margins in fertilizer and so at 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 hedge all and the farmers

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Robert Moskow - Credit Suisse - Analyst Yes, I called it 2004 but it was really 2003. I apologize.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Yes.

Robert Moskow - Credit Suisse - Analyst When you're talking about your negotiations for the raw material for fertilizer, can you be more specific? Are you talking about urea and nitrogen and when do those negotiations begin and secondly, how long are you locked in on your ocean freight contract? You have to re-enter any kind of negotiations there or are you locked in for a long period of time?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO In terms of the raw material contracts for fertilizer, this depends. You have to add sulphur there is a very important component and there are many others. They different types of lengths and different moment when is they have, most of them we had already to renegotiate. So, some of them, you don't have long-term contract and sometimes three months, sometimes a maximum is six months. This is not very long. In terms of our ocean freight situation, it's because of the very high ocean freight rates, obviously the -- how much you can lock in is the timeframes are shorter than normal so at the moment, we're seeing shorter timeframes.

Robert Moskow - Credit Suisse - Analyst Good and one last question, you know, 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 the fourth quarter? When does all of this cash start coming back?

Jacqualyn Fouse - BUNGE LIMITED - CFO Well, and the reason why I remind us of that is because, Alberto, in all of this, has mentioned more than once. We have to look at the business on a full-year basis and not every quarter and we're very happy with the third quarter, but just want to make sure that that is not extrapolated exactly that way. It's going to be largely dependent on what happens with the commodity prices and we saw 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 biofuel situation was a bit different, so, the -- we have moved up and now we're seeing the prices stay higher for a bit longer. That is one of the key things that is going to drive this. Well, what is good is we do see the, at least how far the profitability moving in the direction we wanted it to move in. So.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO And the other question, the other issue is when you look at it in terms of the prices, 70% if you take something like that, so our whole readily marketable inventories went up by $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 corn coming a little bit down and wheat is coming down the last

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Robert Moskow - Credit Suisse - Analyst And then if it comes down too much, what happens to -- let's say we're down to $6 a bushel again and for soy and the ethanol capacity expansion boom fizzles out and that is what drives it, how should we look at that, on the positive is a lot of cash comes back to you. I guess the negative is that it hurts the financial liability of a lot of farmers in Brazil.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO We do not expect a significant. It's very difficult to talk about commodity prices 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's, for what we have never there is not going to be enough, the exchange rate is too strong like at the moment, 180, the market knows, especially on the soy beans and 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 soy beans were going up on the CBOT and more or less in the same pattern. There is a pretty much direct correlation between that so we're not worried too much about that everyone is watching the Real to see what the soy bean price has to be. We're not worried about that at the moment.

Robert Moskow - Credit Suisse - Analyst Very good. Thank you very much. Congratulations.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you.

Operator We'll take our next question from Christina McGlone, Deutsche Bank.

Christina McGlone - Deutsche Bank - Analyst Good morning.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Good morning, Christine.

Christina McGlone - Deutsche Bank - Analyst Congratulations.

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Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you.

Christina McGlone - Deutsche Bank - Analyst You know, Alberto, I think there is a sense here on where do we go from here with these results and I think just wanting to point out that if you hadn't increased your grain capabilities, if you hadn't increased your mining capabilities, if you didn't build out in Eastern Europe, you wouldn't have been able to capitalize on the current situation the way you did, so I think there is definitely a benefit from the environment, absolutely, but I think also that there is a benefit from your strategy and I'm curious, now how do you -- what things are you doing now to get us to the next stage of growth even if conditions, environmentally, are less favorable?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO On a big picture, I think we will continue. We have a very strong -- continue on the path exactly with what we have lined out. We see significant opportunities on expanding our integrated chain both on grain and oilseeds. On grain, we still have a lot of capabilities where we can expand on oilseed as well, and you also see on the integrated chains we continue investing in Eastern Europe to make our Food Products capabilities stronger, and in Poland, we have seen investment, now we're expanding also in food products in Asia. Along the chain, we have potential. We have to -- we are going to bring on the stream our Russian oilseed facility soon, and also our Ukrainian one, so all of this is part of it, we have brought on stream our revitalized or the new crushing facility in Spain and Cartagena and we're revamping our Romanian, Hungarian and Bulgarian facilities so we continue working on this is to strengthen and grow our business.

Now, also our energy team that we have hired this year is making significant and positive contributions to manage our risk in this area. A new area that we added to the portfolio is the sugar business. We started trading last year and this year, we have our first mill. I am sure sooner or later, you will hear about us as we get more comfortable and have the team in place and will start doing the green field here and there and so there are -- we see enough opportunities there that we will continue making the whole integrated chain stronger and bigger.

Christina McGlone - Deutsche Bank - Analyst Okay, thank you. I guess in terms of oilseed, just more on the details. Utilization has been good in North America and improved in South America and there were reports you're going to add a facility in Rondonopolis, and then, in North America, Dreyfuss added a facility and then ADM, Bunge, and Cargill are adding capacity next year. Do you think that we are pushing ourselves to an excess supply situation or is that supply warranted?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO I think it is. The United States, Council Bluffs, it's probably one of the best -- it's Bunge's best plan but 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 Bluffs area. And not only from the western part of the U.S., but also into Mexico and so there is clear demand for that.

But this, we have to remember that the U.S. continues growing it around 1%. So the meal demand and it continues growing from time to time and you need a little bit of expansion. So 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 another plant that is not so much well-located. So the Council Bluff expansion is a no-brainer. I don't think it will impact all margins in North America. The same is valid for our two expansions in Canada, Nipawin and Hamilton. We see this, this is completely following the market trends.

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Now, in the case of Brazil, I think that Rondonopolis, we had expanded it in the past because of the markets and we also have expanded the refinery, which was a shifting and closing at one area and moving it into the other. I think it was probably an old muse. What we're doing is we're working on a new plant. It's not -- this is old news in the northern [Motum], so it is north of Rondonopolis together with the biodiesel plant which going to be built by one of our partners, a farmer. This is in the final planning stage and it's 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're 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 - Analyst Okay and last question. I think with commodity prices so high, do you think there is a chip in thinking, the industry participants that they really, when you look at the soy bean price margin, you should be charging more for the cost of the bean in terms of capital rather than just spread but actually put in sort of a cost of using the capital for the time you're holding on to that bean? I don't know if that question is clear.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO I understood you correctly. 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 it on a net present value so the financing cost 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 didn't participate. It's one of the explanations why we had an expansion of all market share. But we need higher returns. I think the whole industry is in the same way. We have to cover our costs.

Christina McGlone - Deutsche Bank - Analyst Okay, thank you.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you.

Operator We'll take our next question from [Vincent Andrews], Morgan Stanley.

Vincent Andrews - Morgan Stanley - Analyst Good morning, everyone.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Good morning, Vincent.

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Vincent Andrews - Morgan Stanley - Analyst Most of my questions were answered, may be a couple of quick once. As we think about next year and acreage expansion in Brazil, particular to soy beans, how do you think about or how should we think about. The USDA said there will be 87 million planted acres of corn next year versus 93 this year, and this will likely go back to soy beans. How should we think about that effecting what goes on in Brazil from a planting perspective. Will it make an impact at all?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO I believe the market is reading it correctly. That there is -- we had these shortfall also from sunflower in Eastern Europe and the palm plantations from southeast Asia didn't grow as fast as expected. The rapeseeds, these are heavily in oil. They didn't grow as expected and so the view that we see that, also from the view that the USDA is saying, this is a normal view. Everything is in balance, more the market is more trying to be more in balance at the kind of locals we have seen on pricing. We're not seeing yet any excessive growth like we saw in sugar. We're not seeing any aberration there.

Vincent Andrews - Morgan Stanley - Analyst Okay. Thank you very much.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO You're welcome.

Operator Our next question comes from Pablo Zuanic with JPMorgan.

Pablo Zuanic - JPMorgan - Analyst Good morning, everyone.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Morning, Pablo.

Pablo Zuanic - JPMorgan - Analyst I guess my question is very specific. When I look at your agribusiness division I really that you are like ADM that splits the oilseed crushing earnings from the services earnings. You put them together but it would help if you would tell us, for example, this $366 million EBIT, how much was from crushing and how much is from our services and of the delta, -- year-on-year, quarter-on-quarter, about $250 million in EBIT, how much was from oilseed crushing and how much from services? Any quarter there would help.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO We don't do it because we don't look at the business like that. That the way we look at the business is we have the basic flow first of the oilseed. We have the grain origination which means not only corn and wheat but also soy bean grain. This is part of

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© 2007 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Oct. 25. 2007 / 10:00AM, BG - Q3 2007 BUNGE LIMITED Earnings Conference Call the chain and we process it and then we distribute it to the destination. We see this as one chain. In addition to that because we have all of this infrastructure, we lay over it, we lay the grain business. And in addition to that, we also lay our trait structure finance, we have to lay our freight, we have to lay our energy. This is so integrated, it's very difficult to separate that. That is why the way we also manage it internally is like that so we don't separate the way, perhaps, others do.

Pablo Zuanic - JPMorgan - Analyst Okay, I understand. If we look at just oilseed crashing margins on a global basis for Bunge, how much did they change? They change by 10 basis points? Fifty bases points year-on-year, just roughly on the crushing site.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO These are 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 some spots where there was perhaps less supply. South America, they're good and there was some, for us, it's not that relevant in China. There were some issues about the -- crushed margins because of lack of demands on meal. Overall, the crush environment is better than last year.

Pablo Zuanic - JPMorgan - Analyst Thank you, your EBIT margins year-on-year went from 2% to 3.8. Would you say in crushing your margins went up 150?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Probably not that much. When I look at it, we had on the freight side, we had the tail end of our old contracts last year, so the freight is contributing more, grain is contributing more and probably the contribution from the oilseed is not -- the increase is not as much as the others.

Pablo Zuanic - JPMorgan - Analyst Thank you and just a follow up, when we think about the capacity, I'm trueing to understand better how you increase capacity on the ag services side, and you touched on it before partly, but are you adding more elevators? Do you have more corn contracts? You have more buyers. How does that work and there has to be a limit to that are, I suppose. Could you help us understand that part better, please.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Yes. In the North America, we have not expanded at all. We have -- the only difference was that we have signs, long-term contracts, for example, with Iowa, with a partner of ours, which is agriservices and we have complete new origination system. Without having to invest where we were just working with a partner together and we have more access to grain. In Eastern Europe, it was a mixture and we bought some silos and last year we didn't buy any. They were all bought in '06, '05 in Ukraine and Russia. The key here is building a team. We hired the team, so the investment is more in personnel expenses. We also had put through agreements in the [Port of Illicesk], we built a terminal in Latvia and a terminal in Mostov in Russia and this was all done in the past. This year we didn't expand at all.

What we're 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 past, some of the farmers were more capitalized. In fact, we reduced somewhat our silos so our capital intensity in Brazil in terms of silos were somewhat reduced. We didn't expand

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© 2007 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Oct. 25. 2007 / 10:00AM, BG - Q3 2007 BUNGE LIMITED Earnings Conference Call our grain origination. We think we used all of our soy bean origination to do corn. So, it is really a question of what happens this year is much more about efficiency. Probably we slightly reduced our asset base and grain origination in the world but expanded a little bit on the team but all the additional volume was more about efficiency.

Pablo Zuanic - JPMorgan - Analyst That is very useful. I appreciate that and just a follow up, if I may, on the fertilizer side, you made comments on pricing. The way I think about it, if year-on-year dollar fertilizes prices on a global basis are higher than in '07, that could more than offset the exchange issue, right? On the important component, you make a steady spread but on the local component, when dollar prices are higher, that margin in that business, of course. Even if you have exchange rate issue.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO The key point for us is the margin between international prices of fertilizer into raw materials. What has happen side the raw materials for sulfur, nitrogen, urea, potash, all of these raw materials that we don't have, they went up. They probably went up now higher than the international price of fertilizer went. There is where our margins contracted. Now on the stronger Real , all of our expenses also went up, and somewhat of that we have hedges, but it's not perfect, so we can't probably hedge all of that. And there is clearly a contraction on the margin side looking forward.

Pablo Zuanic - JPMorgan - Analyst That -- if I may, one last one. Going back to ag services, in very simplistic terms, I think as a big trading business, you have to make decisions of capital allocation to that business. Is there a limit to how much you are located to that business, I suppose? How should we think about that? It seems you hit a wall at some point with all of this growth or is there is no limit? Think about it.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO We see when you think about that, the global demand of the soy bean meal, vegetable oil, scorn growing at around 4, 3, 4, 5%. So somebody has to deliver to feed the population around the world. When you look at our volume growth in the guidance, the long-term guidance, it's -- we think it is on the agribusiness is -- .

Mark Haden - BUNGE LIMITED - Director IR Six to 8%.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO We believe what we're doing is by being positioned in growth areas like in South America and in Eastern Europe, by just keeping our market share in these areas to continue feeding, helping feeding the world, we will continue growing. Obviously, there are moments where you have to expand more on SS like before and the moments where you have to work on expansion of the team and moments where you just consolidate. I think at the moment, we're in the phase where we're consolidating more on using our investments in pods using our investments in silos and investments in people and just making the whole system work more efficiently. We'll probably see sooner or later, we'll start seeing little expansions here and there as well.

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Pablo Zuanic - JPMorgan - Analyst Thank you. That's very helpful.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you.

Operator We'll take a follow up question from Christine McCracken from Cleveland Research Company.

Christine McCracken - Cleveland Research - Analyst Yes. Just a quick follow up. Alberto, you talked about your ongoing commitment to expand into sugar and yet we have seen a pretty steep 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 country's build out of ethanol capacity. Does that create opportunities for you? You talked about green fielding but at the same time, it seems like some of these plants would be under pressure.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Yes, there is pressure both from ethanol and from the sugar price as well because of the high production in India and all of you as a long-term view and we never looked too much at the situation of these very high margins that were out there, 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're 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 and others will contribute, India, Thailand, but a significant amount will have to come from Brazil. As we look over the next 10 years, the capacity of sugar production will have to double. So some 400 mills we see today, it will have to go another 400 mills will have to be built and just to continue the expansion of sugar and the domestic Brazil and ethanol program, so the -- I would consider the export component of ethanol is more the icing on the cake that the real driver of this demand situation.

Christine McCracken - Cleveland Research - Analyst Have you seen a drop actually in prices for some of these mills in Brazil? How does that market look now?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO You mean a drop for what?

Christine McCracken - Cleveland Research - Analyst for the price of the mill, you know, the competitive market or -- has the competitions for those mills. Alternative mills. Has that price come down or are there --

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Alberto Weisser - BUNGE LIMITED - Chairman, CEO The only thing we're 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 anymore. And I think this will probably take some time until this converges. I always like to remind people we had these major crisis in China in 2004 and we were only really able to buy assets at reasonable values at the end of '05 and beginning at '06. It takes some time until the sellers of assets realize they have to adjust to a new environment. I think it will take more time until they reduce the price expectations.

Christine McCracken - Cleveland Research - Analyst And then another quick follow up on biodiesel, we saw this week a pretty significant player in Europe, actually shut down and I'm wondering can you give us more color on that market or how you see the biodiesel market evolving. There has been some, I guess, criticism of the U.S. policy of bringing biodiesel into the U.S. and re-exporting it to Europe. Can you talk about that environment and how that expects your participation?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO 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 them are not operating, but at the moment, the margins are above variable costs and most of the people, most of the players are operating, some not, some, obviously, there is also an 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 complaint is that not the U.S. biodiesel is being imported into the U.S., added 1%, and re-exported. This is the biggest distorting factor going on in the biodiesel business.

But I think what we're seeing at the moment is an accommodation of the industry and we still see we're expanding, we're building, we're minority investor but we're building two biodiesel plants in the U.S. There is a business rationale. We have seen also in Brussels the government continues to have this kind of soft mandate so they want to continue the detaxation system in Europe. So the business logic for the biodiesel is is there and we're not going to, probably not going to see so soon these very high margins that were out there. We're comfortable with our strategy of only being a minority investor in different parts of the world and with our partner, we're building the facility in Bilbao, Spain, and we're also building with a partner a facility in Argentina. These are all very logical moves and you saw at the moment we have not built any one in Brazil. We didn't hear how it works, would work and so the biodiesel, there is an accommodation going on in the biodiesel sector. It will be a little bit on the stress as the vegetable oil prices are high.

Christine McCracken - Cleveland Research - Analyst 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 in advance or is it that it's so far out, the market already knows that and priced down?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO We have to be -- for us, the freight is really much more about to manage the risk because we are responsible for, at the end, we invoice this to our customers around the world and our customers are clearly not happy with the high freight rate and so it is, I think the long-term view on freights or the long-term contracts on freight are not that much available out there. Everybody is worried about the high price.

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Christine McCracken - Cleveland Research - Analyst All right, I'll leave it there. Thanks.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you.

Operator We'll take a follow up question from Ken Zaslow, BMO Capital Markets.

Ken Zaslow - BMO Capital Markets - Analyst A quick follow up. Who did you gain market share in the grants from, the large players or smaller guys?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Clearly from the small players, the regional small players.

Ken Zaslow - BMO Capital Markets - Analyst The large company coming in wouldn't have been effected.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO I don't think so.

Ken Zaslow - BMO Capital Markets - Analyst I appreciate it.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you.

Operator We'll take a follow up question from David Driscoll, Citi Investment.

David Driscoll - Citi Investment Research - Analyst Thanks a lot. I'll 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 is Bunge's opinion on the outlook for corn pricing? Do you think it should hold in there in the future markets at roughly $4 a bushel? Or do you potentially see that it might be lower?

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Alberto Weisser - BUNGE LIMITED - Chairman, CEO We don't have a strong opinion there. We look much more at the volume, the supply and demand. Because we're always hedging ourselves, so we don't look too much at it. We look at the pricing much more from a farm economics point of view and to be honest, I don't know what our internal view is. On that price level.

David Driscoll - Citi Investment Research - Analyst Maybe just a second question here on the whole U.S. ethanol side. Obviously you have been clear about your sugar-based ethanol strategy in Brazil. Given a reduction in asset prices for U.S. ethanol, is it something that you considered to look at acquisitions of U.S. corn ethanol?

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Look, we don't like too much to talk -- at the moment, our view is clearly that we work with our partners and we work, as a very selective, as a minority investor. But if the facts change, we will have a different look, but I didn't do any homework yet, to be honest on my side.

David Driscoll - Citi Investment Research - Analyst Very good. Thank you very much.

Alberto Weisser - BUNGE LIMITED - Chairman, CEO Thank you.

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

Mark Haden - BUNGE LIMITED - Director IR Thank you and thanks to everyone for joining us today. See you next quarter.

Operator Once again, that concludes today's conference call. We thank you for your participation, and you may disconnect at this time.

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