KARACHI, Oct 24: Cotton prices on Friday reacted bullishly to fresh limit-gains in the New York cotton futures followed by strong speculative buying aided by reports of global shortage of the commodity in the backdrop of heavy buying being made by China to cover the local crop shortfall.

New York cotton futures, which in a way regulate the world prices on Thursday evening were quoted higher by limit-gain at 80.59 and 82.72 cents per lb, up by 3.00 cents per lb for both the ruling December and the distant March contracts.

The above 80 cents per lb rate has touched the 20-year peak level, local analysts claim adding “it appears to be heading towards its all-time highest level of 106 cents per lb hit in late 70s, owing to global shortage of the commodity including Pakistan.

For the second session in a row, the price flare-up in the New York cotton futures has sent shock waves among the deficient countries including Pakistan about the competitive supplies of lint in the weeks to come.

China, facing a crop shortage of about 0.7m bales because of early season heavy rain and floods is said to be on a big shopping list on the world market to feed its massive textile industry is fuelling the current price flare-up on the world markets, local brokers said.

Floor brokers said local lint prices are following the international trend and that is perhaps after having fallen to Rs3,200 per maund early this week have again risen to their recently established peak level of Rs3,500 per maund.

“The local market is again in the tight grip of speculative forces which are out to create supply problems for the textile sector at competitive rates”, they said adding “the crop may be a bit short of the target but not that alarming so as to cause a price flare-up”.

Local prices will certainly ease from the current higher levels after the speculative squeeze on the New York cotton futures eases during the next couple of sessions, spinners hope.

Official spot rates were, therefore, again upped by Rs125 per maund to Rs3,400, while in physical trading some of the deals were done well above them.

Ready business was on the higher side as leading spinners continued panic buying irrespective of the price hike. As a result, till late in the evening about 20,000 bales, mostly from the Punjab ginneries changed hands, the following being some of the notable deals:

SINDH VARIETY: 200 bales, Shahdadpur at Rs3,250, 200 bales, Setharja at Rs3,450, 200 bales, Rasoolabad also at this rate.