KARACHI, Nov 2: Physical business on the cotton market on Wednesday shrank to modest proportions as both buyers and sellers kept to the sidelines because of delivery problems ahead of Eid holidays.

A near-lull on the ready section was also caused, notably on the local market, because of Hindu festival, Dewali and the absence of leading Hindu cotton traders and ginners for the second day of celebrations.

Spinners and mills did not opt for fresh buying owing to delivery problems and were not inclined to take price risk during the market’s four-day closure on account of Eid holiday, brokers said.

But some others say higher than expected arrivals of phutti into the ginneries for the fortnight ended Oct 31, are kept spinners out of the market as they awaited the impact of higher arrivals on the prevailing prices during the post-Eid sessions.

According to official figures released by the Pakistan Cotton Ginners Association (PCGA) for the fortnight ended Oct 31 a total of 4.738m bales of cotton reached the ginneries, which are 2.184m bales higher than the last fortnight’s figure of 2.554m bales.

But market sources said the figure is lower than the previous during the same period last season, which in turn boosted prices by Rs50 during the last couple of sessions.

Out of the total of 4.738m bales, spinners have so far purchased 2.865m bales and exporters 45,300 bales, leaving an unsold stock of 1.827m bales with the ginners.

“An unsold stock of 1.827m bales is much higher than the previous figures and reflects some reservations on the part of the spinners and mills”, brokers said, adding “it also means that about Rs20 billion of ginners are tied to them, a strain on their liquidity”.

Although latest arrival figure was on the higher side than the market expectations but still it did not gave a clear idea of the total crop and that factor could keep market a bit volatile, they said.

Official spot rates did not show any change and were firmly held at the last close but on the other hand New York cotton futures rose by 0.24 and o.29 cents at 52.11 and 54.78 cents per lb for both the ruling December and the forward March contracts respectively.

Ready business was light totalling about 1,000 bales as under: 200 bales, each Muridwala and Mamoo Kanjan at Rs2,395 and no business was reported in the Sindh variety.