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The 22-year-old has caught the eye of several clubs across Europe after impressing at left-back for Portugal during the World Cup group stages.
Madrid's number one target for the left side of the defence is Aleksandar Kolarov of Lazio and Serbia, but FIFA agent Ernesto Bronzetti yesterday classified the move as undoable.
Coentrao was strongly linked to Madrid upon Jose Mourinho's installment as coach at Santiago Bernabeu, but the former Chelsea boss declared he had no interest in signing a player he described as 'a Portuguese Marcelo.'
But with the Merengues failing in their efforts to land Kolarov, they are reportedly set to turn their heads back to Coentrao, who is contracted to Benfica until 2015.
However, Madrid will face stiff competition for Coentrao from Juventus and Bayern Munich, with the Bundesliga champions having had a £16.4 million (€20m) bid rejected by Benfica, as it fell short of their player valuation of £24.65m (€30m).
How will the tournament go? Check out Castrol Football's 2010 FIFA World Cup Tournament Predictor.
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