KARACHI, July 2: A fresh price flare-up was witnessed on the cotton market on Monday as reports of fresh rain in the cotton belt and damage to standing new crop worried spinners and mills over the future supplies and leading among them indulged in panic buying.

An inter-mill deal of 1,000 bales from the Punjab cotton belt was reported at the season’s so far highest level of Rs3,000 per maund but a leading cotton analyst Naseem Usman predicts fresh pressure on supplies both from the local and foreign sources could further accentuate the supply position in the coming weeks.

But ginners were sitting pretty comfortable on their unsold stock of about 40,000 bales of fine lots and appear to be an upbeat mood anticipating a fresh price flare-up.

“The lint price may not surpass the all-time previous highest rate of Rs3,600 per maund hit a decade earlier owing to a short crop of below 10m bales, but inter-mill buying spree at Rs3,000 per maund could push the price further higher in the coming weeks,” some ginners said.

Ginners said it was too early to say about the damage to the new crop in the recent rain in the entire cotton belt but rumours about the damage would continue to influence prices on the higher side.

“The current rain spell could both benefit and damage the new crop depending on its intensity,” said a cotton analyst adding: “If there is heavy rain and water kept standing in the cotton field for a couple of days, it will damage the crop but if the rain is modest and the land absorbs the rain water well in time it is beneficial for the crop.”

However, next few days are crucial for the growth of the crop as it needs clear and warm weather, which could kill the insects and pests, which breed in cold weather, they added.

Official spot rates were firmly held at the weekend level of Rs2,650 per maund but in the ready section no deal was reported.

An inter-mill deal of 1,000 bales, between the Punjab mills was reported at Rs3,000.00 per maund.