KARACHI, Dec 31: Cotton prices on Wednesday rose further in sympathy with New York cotton futures as ginners held on to their positions anticipating another price flare-up.

Physical business shrank to modest proportions partly because of year-end considerations and partly to higher asking prices by the ginners.

"How the market will resume new account buying is pretty difficult to predict at this stage, indications are that it will rule firm during the new year as supply and demand factors are highly tilted in its favour," predicts a leading cotton broker.

With local crop estimate around 9.5m bales, leaving massive supply gap between the total supply and the mills annual consumption needs, there is a strong possibility of an imminent price flare-up.

"The supply gap of about 2m bales is too big to be bridged at a competitive prices as the spinners embark upon a shopping list, world prices are bound to rise from the current levels," market sources said.

Already, New York cotton futures had surged to well above the 70-cent per lb mark after the post-Christmas trading sessions, and local spinners entry into the world market after the size of the crop is fully known, there could be further increase in prices.

New York cotton futures on Tuesday closed at 74.37 and 75.42 cents per lb higher for both the ruling March and the forward May contracts, up 0.40 and 0.47 cents per lb respectively.

Floor brokers said although bulk of the phutti has already reached the market place and is selling around Rs1,500 and at slightly lower depending on the quality, ginners may not be in a position to lower their selling prices.

Reliable reports are also floating in the cotton trade circles that some leading growers are still holding on to unsold stocks of phutti and will possibly sell it in the middle of the new year, they said.

After having fallen from the peak seasonal levels, lint prices were on the decline during the last about two weeks as mills have curtailed their daily intake but now they are again on the rise amid rumours of a short crop and higher world prices.

Official spot rates were revised upward by Rs25 but in the ready section most of the fine lots were done well above them. Ready offtake was modest totalling about 10,000 bales, the following being some of the notable deals:

SINDH TYPE: 400 bales Tando Adam at Rs2,900, 400 bales, Shahdadpur at Rs3,050, 400 bales and Nawabshah at Rs3,100.