Brazil 2007-08 Coffee Crop May Fall 27% on Low Cycle (Update1)

By Katia Cortes

(Bloomberg) -- Brazil, the world's largest coffee producer, expects its 2007-2008 harvest of the bean to drop as much as 27 percent as its coffee trees enter the low-production year of a two-year growth cycle.

Brazil production may fall to between 31.1 million bags and 32.3 million bags of coffee in the harvest that starts in June 2007, compared with 42.5 million bags produced in the 2006-2007 season, the Agriculture Ministry's crop forecasting agency said today in a statement distributed in Brasilia.

The drop in output, which is generally lower in the second year of the two-year production cycle, was made worse by a severe drought in Minas Gerais and Sao Paulo states, which together produce more than half the crop in Brazil, said Linneu Carlos da Costa Lima, the ministry's secretary for production.

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