UPDATE 1-Guatemala to leave International Coffee Organization - sources

(Adds context on coffee pricing, ICO comment)

GUATEMALA CITY, July 1 (Reuters) - Guatemala has begun the process to leave the International Coffee Organization (ICO) due to concern over falling coffee prices, a Guatemalan government official and another person familiar with the matter said on Wednesday.

Coffee is the second most important agricultural export for the Central American country, which is struggling to recover from a 2012 roya fungal outbreak, in addition to the economic challenges of the coronavirus crisis.

The Guatemalan official said Central American countries were seeking alternatives to support the coffee industry due to pricing concerns as global coffee prices are trading at low levels. Guatemala mainly produces Arabica. The ICO said it had not been officially informed of Guatemala's plan to withdraw from the International Coffee agreement, but that it was aware "some forces in the country" were dissatisfied with ICO's handling of the pricing crisis.

"We hope that these rumors will not materialize," ICO said in a statement, urging Guatemala to work with other members to develop a new agreement.

It added that it was not able to act as a market regulator. (Reporting by Sofia Menchu; Additional reporting by Maytaal Angel in London Writing by Diego Ore and Daina Beth Solomon; Editing by Sandra Maler)

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