Brazil Coffee Exports to Fall 11% as Output Drops (Update1)

By Carlos Caminada

Jan. 10 (Bloomberg) -- Brazilian coffee exports will fall 11 percent this year as growers harvest fewer beans and inventories decline.

Brazil, the world's biggest producer of the bean, will export 21.7 million bags of coffee, compared with an estimated 24.4 million bags in 2006, the Coffee Exporters Council said today in a report.

The decline in exports, fueled by a drop in output and inventories, will likely drive futures for Arabica beans above $1.30 per pound in New York in coming months, said Eduardo Carvalhaes of coffee exporter Escritorio Carvalhaes.

``We are entering a year of a precarious balance between production and demand,'' Carvalhaes, whose family has exported coffee for more than a century, said in a telephone interview from Santos, Brazil. ``Brazilian production and stockpiles are dwindling at the same time.''

Arabica futures gained 17 percent on the New York Board of Trade over the past three months after dry weather hindered the flowering of trees in Brazil last year. They rose 2.35 cents, or 2 percent, to $1.2075 per pound in New York today.

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