* Low sales from Brazil as futures fall
* Colombian prices continue weakness, Vietnam firm
HAMBURG, Sept 7 Price differentials for Brazilian arabica firmed in Europe's cash coffee market this week on a lack of selling by the country's producers who were deterred by low coffee futures, traders said on Friday.
"A lot of Brazilian producers are holding their coffee in store and seemed to be very unwilling to sell at the depressed level of New York futures this week," one trader said. "Differentials were firmed to reflect the weaker futures trend and the shortage of supplies."
Brazil MTGB fine beans for September onwards shipment were quoted around 6 cents under ICE's New York December arabica contract on Friday against 8-11 cents under in the previous week and 16 cents under two weeks ago.
New York ICE arabica coffee futures fell to their lowest since June on Thursday, with prices weighed by a rise in ICE-certified stocks to a two-year high as Brazil's harvest entered its final stages, but futures recovered on Friday.
"There was some Brazilian business in German-grade beans this week but U.S. buyers seemed to be more active than the Europeans," another trader said. "The Brazilians do not see themselves as being under harvest-time pressure to sell, some producers argue they will have new opportunities to sell into exchange stocks in coming months."
"For spot supplies, plus differentials (prices over New York) were demanded in Brazil this week."
The New York ICE futures market has decided to accept Brazilian arabicas for physical deliveries, with the first gradings already underway for March 2013 delivery.
The start of the coffee harvest in Brazil, the world's largest Arabica exporter, was delayed by rain in June and may take longer to complete because of recent unfavourable weather. But European roasters believe a good, large crop is being gathered.
COLOMBIAN CROP LOOMS
Colombian price differentials dropped again with only about two weeks remaining before the harvest starts. Roasters expect a good crop following several disappointing harvests despite some reports of trouble.
Colombia Excelso beans for September/December shipment were quoted on Friday at 10 cents over the New York December contract against 11 cents over last week and 15 cents over in early August.
"The crop outlook in Colombia is looking better after several years of bad harvests and high differentials," a trader said. "Roasters were holding off this week, expecting differentials to fall into single figures later in September as the new crop rolls in."
New Central American harvests are also looming.
Remaining current crop supplies from Guatemala were traded at depressed differentials of 4 cents over nearby New York contracts against 6 cents over previously as storage space was cleared to prepare for the new harvest, traders said.
Traders noted good purchase interest in new crop Honduras beans but with local exporters unwilling to sell at the depressed levels seen in New York futures during the week and with concern about the impact of rain in the country.
"There are growing stocks of some Central American origins in Europe and this is putting a brake on trade as coffee does not improve with age and will have to be put on the market sooner or later," a trader said. "Some European roasters also seem to have good supply cover of Centrals into November and possibly to the end of the year."
Stocks of Honduras coffee in Antwerp certified as meeting New York ICE exchange standards rose to 256,415 bags of 60 kg on Sept. 6 from 156,902 bags on Aug. 1. Stocks in Hamburg and Bremen rose to 38,105 bags from 33,613 bags in the same period.
Kenyan differentials were down again on selling pressure on good supplies. Kenya AB FAQ beans for September shipment were 20 cents over New York on Friday against 25 over last week and 40 over at the beginning of August.
In robusta, differentials in top producer Vietnam firmed as supplies tightened before the new crop likely to start in the second half of October and with business disrupted by big swings this week in London robusta futures.
Vietnam Grade 2 for September/October shipment was at $10 over London's November robusta contract against $10 under last week.
"There were a lot of inquiries this week by both roasters and traders about the price levels for Vietnam's new crop," a trader said. "Overall the new crop seems to be developing well and new crop Grade 2 is settling around $30 under London."
"If London prices continue the downward trend seen since July the concern is that farmers in Vietnam will be reluctant to sell their new crop." (Reporting by Michael Hogan; Editing by Anthony Barker)