The former Real Madrid coach has proved a huge success - both on and off the pitch - as Brazil manager.
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His current deal runs to the end of next summer's World Cup, but the CBF now want to extend the partnership, says Globo.
Initial reports had the CBF wishing to have Ancelotti remain until the Copa America.
However, it's now emerged they plan to offer a contract to 2030, which would take Ancelotti through to a second World Cup as Brazil coach.
Negotiations have begun and are being described as 'natural and relaxed' and with mutual interest in reaching agreement.