London, Jan 5 – Arabica coffee futures fell sharply on Monday, weakened by a surging dollar and strong Brazilian exports and sugar also eased but cocoa bucked the trend and edged higher.

"The more interesting years will be the ones from 2009/10 and counting," Licht said, forecasting ending stocks in 2008/09 should rise to 32.2 million 60-kg bags, from 30.7 million a year earlier.

"Current prices simply do not offer sufficient incentive for producers to increase output, which would be necessary to continue matching demand," the analyst said, issuing its first estimate of the 2008/09 world coffee balance.

"Without wishing to appear alarmist, the longer prices remain at current levels, the more precarious the balance sheet will become. It could well be the case that every last bean of coffee will be needed sooner rather than later.

Higher ending stocks in 2008/09 reflected a rise in production to 138.5 million bags from 120.5 million, partially offset by an increase in consumption to 127.8 million from 126.4 million.

"While the global economic slowdown is expected to cut demand in 2009 for a diverse range of commodities such as crude oil, copper, aluminium, steel, automobiles and so on, there is no evidence that consumers have cut back on coffee use or will do so in the coming months," Licht said.

The analyst said higher production from top producer Brazil and another bumper crop in Vietnam would give importers the chance to rebuild stocks in 2008/09.