Brazil Launches Measures to Boost Coffee Prices

August   7, 2013, 11:24 a.m. ET
 Brazil   Launches Measures to Boost Coffee Prices 

Government   Will Buy Up Supply as Bumper Crop Is Expected

 By   JEFFREY LEWIS


SÃO   PAULO—Brazilian President Dilma Rousseff said Wednesday that the government  will  launch two programs to buy as many six million bags of coffee to help prop  up  growers' incomes, the Agência Estado news agency
  reported.


The   government will offer growers options contracts to sell as many as three  million  60-kilogram (132-pound) bags of coffee at 346 reais ($150.55) per bag,  Estado  cited the president as saying. The contracts will have a delivery date  in March  2014.


Ms.   Rousseff also said the government will buy as many as another three million  bags  at 307 reais per bag, though she didn't give any more details, according  to the  news agency.


An   agriculture ministry spokeswoman couldn't immediately confirm the report. 



Arabica   prices have tumbled 18% this year on expectations for a record off-year coffee   harvest. Brazil's two-year coffee production cycle is characterized by   alternating years of higher and lower productivity—with 2013 being a down year.   But dry, temperate weather in Brazil's main growing regions is expected to help
  this year's harvest come close to last year's   record.


Arabica-coffee   futures rose Wednesday immediately after the report, with the contract for   September delivery on the ICE Futures U.S. exchange up in late-morning trade   2.2% at $1.2075 a pound.


Brazil,   the world's biggest coffee grower and exporter, has used option contracts in  the  past to augment growers' income.