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Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to SLC AgrĂcola First Quarter of 2018 Earnings Conference Call. Today, we have with us Mr. Aurelio Pavinato, CEO; and Mr. Ivo Marcon Brum, CFO and Investor Relations Officer. We would like to inform you that this event is being recorded. [Operator Instructions] Also today's live webcast, both audio and the slide show, may be accessed through SLC AgrĂcola website at www.slcagricola.com.br in the Investor Relations section by clicking on the banner Webcast 1Q '18. The following presentation is also available to download on the webcast platform. The following information is available in thousand of Brazilian reais and in IFRS, except when otherwise indicated.
Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of SLC AgrĂcola management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and, therefore, depend on circumstances that may not or may occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of the company and could cause results to differ materially from those expressed in such forward-looking statements.
Now I will turn the conference over to Mr. Aurelio Pavinato, CEO. Mr. Pavinato, you may proceed.
Good morning. Thank you for participating in SLC AgrĂcola's earnings conference call for the first quarter of 2018.
Let's start, please, on Slide 3. Soybean yields in '17/'18 crop year compared to '16/'17 and hedged in the last 5 years. As we commented in the announcement from our management in our earnings release, the results for the first quarter once again are a great source of pride for our company. With the conclusion of the soybean harvest, we set a new record for yields of 3,756 kilograms per hectare, which is 11.8% above our initial guidance. As you can see in the chart, our production potential has clearly increased, which reflects the execution of our strategies to capture operating efficiency gains.
Let's turn to Slide 5, cotton price, where we will begin our comments on the recent price variation in our main products and the short-term price outlook. So far in 2018, cotton prices once again rallied, with the commodity currently trading at around $0.85 per pound in shorter-dated contract in New York. Weekly U.S. sales have been setting new records, attesting to the strong demand for cotton in 2018. According to USDA forecast, global consumption in the current cycle should set a new record, surpassing the marks of 120 million bales, effectively crowning the recovery in cotton demand that has been ongoing since the 2012/'13 crop year.
As you can see on Slide 6, U.S. soil moisture conditions, despite the expectation -- expansion in cotton planted areas in the United States in the '18/'19 crop year, which already is being planted, there are major concerns with soil moisture conditions in Texas, which is the country's leading cotton-producing state. USDA data points to a preponderance of extremely and exceptionally dry conditions. So the involvement area could be big.
In the case of soybean, whose price chart you can see on Slide 7, soybean price, we also had the scenario of the rising prices in these first few months of the year. This current context of price quotes, about $10 per bushel in Chicago, reflects mainly the shortfall in Argentina due to the country's severe drought. Soybean production volume in Argentina, which should come in 30% below the initial forecast, is currently estimated at 38 million tons, which represents a shortfall of 16 million tons.
In the United States, for the '18/'19 crop year, the USDA, through the -- through its first report of planting intentions for 2018, projected a reduction in the soybean planted area of 1% compared to the previous crop year, booking the rest of the market with an estimated expansion of around 2%.
Corn prices, which you can see on Slide 8, corn price Chicago and ESALQ, also had risen in Chicago in recent months. The main factors that influenced this upward trend in prices are also the drought in Argentina, which reduced the country's output by nearly 10 million tons, and the expansion -- expectation of a reduction in planted area in the United States in the crop year, which is corroborated by the USDA, which estimates a reduction of 2 million acres.
In the domestic market, corn prices in the first quarter are once again [indiscernible] from exports tariff prices, given the combination of a reduction in planted area for first crop corn in Brazil and a success export program during 2017, when the country exported 29.2 million tons, according to SECEX.
I will now pass the call over to my colleague, Ivo Brum, our CFO and IRO, who will comment on our financial results in the period.
Good morning, everyone. Let's move to Slide 10, which presents the highlights from our income statement in the period.
The net revenue advanced 21% on the first quarter of 2017, basically due to the higher volume of the cotton invoiced, giving the crops better prices in the first quarter of the year. Another important factor was the determination of the fair value of Biological Assets of BRL 239 million in the first quarter, which reflects the gross margin expectation for the soybean crop already incorporating the excellent view I have given you.
EBITDA in the quarter grew 22% year-over-year to BRL 150 million with margin of 35%. EBITDA growth also was driven primarily by the higher volume of the cotton invoiced in the quarter, combined with higher price and lower unit cost.
Net income, which come to BRL 169 million, was supported by this high-yielding operating income and lower financial expenses. Both EBITDA and net income set new records for the first quarter.
As you can see on the Slide 11, the period marked another quarter of positive free cash flow, which stand to BRL 22 million. Part of this cash generation was used to close the share repurchase program announced in 2017 of 2 million shares, which was concluded in March.
As a result, net debt is still at a very comfortable level of 1.14x EBITDA in the last 12 months.
I will now pass the call back to Aurelio Pavinato, who will comment on the outlook for the rest of the year.
Thank you, Ivo. Let's move on to Slide 13 table cost per hectare '17/'18 compared with actual cost '16/'17. In this slide, you can see the cost per hectare of the current crop year, which are stable in comparison with the previous crop year. The outlook for the quarter in corn crop is also very positive. The cotton crop already is in the final stage of the cycle, which we feel presents excellent potential yields, with the output expected to surpass the initial forecast. The corn crop also is well established and presenting good vegetative development, having enjoyed favorable weather conditions to date.
Furthermore, as you can see on Slide 14 table, with prices hedged in reais per pound for cotton and reais per bushel for our soybean 2018 versus 2017. We had prices hedged for the year at levels similar to those obtained in 2017. And the average price of the balance for sale could still improve given the recovery in prices in recent months and the weaker Brazilian real.
This leads us to conclude that the margins for this year should remain at high levels.
Thank you. Let's now open the call for questions.
[Operator Instructions] Thank you. This does conclude today's presentation. You may disconnect your line at this time, and have a nice day.