832.61333/12–2145: Airgram

The Vice Consul at Sao Paulo (Welch) to the Secretary of State

A–213. Coffee prices in Santos continued to decline. On December 21 direct deliveries for December, January–June, July–December, were Cr.$58 per kilos as compared with Cr.$59.50 a week earlier. The decline in price has been brought about by less demand in the United States. Exporters are offering coffee under ceiling prices but are finding no buyers in the States. Reported in Santos U.S. has bought 4,000,000 bags under the 3-cent subsidy program of which 2,000,000 are Brazilian coffees. Belgium reported purchased 25,000 bags type 4 coffee for 40 points over ceiling price. At present buying at 10 points under ceiling. Norway and Denmark have made inquiries but have not purchased since prices have apparently gone down. Santos exporters believe holders are selling coffee because the Cr.$65.00 Brazilian subsidy will not apply to next year’s crop.