Brazil Subsidizes 4 Million Bags of Coffee at Auction

By Carlos Caminada

June 27 (Bloomberg) -- Brazil, the world's biggest coffee grower, agreed to subsidize all 4 million bags of beans offered at an auction after a currency rally eroded export profits.

Brazil will pay growers a subsidy of 39.99 reais ($20.40) a bag to supplement prices paid by roasters and exporters, the Agriculture Ministry said. Today's auction was the first time the government offered to support prices for coffee since 2002.

The Brazilian real has surged 59 percent in three years, the best performance against the dollar of the 16 most-traded currencies. The rally has narrowed exporters' profit margins.

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