KARACHI, May 26: Cotton market on Wednesday witnessed a price flare-up followed by panic-buying by mills caused by predictions of further pressure on the ready supplies in the coming weeks.

"Prices are virtually soaring to their pre-reaction levels hit late last year as spinners and mills find it difficult to honour their export commitments in the backdrop of ready supplies", brokers said.

An idea of panic-buying by mills may well be had from the fact that a leading spinner group purchased a big-lot of 2,000 bales at Rs3,300 per maund. The previous all-time peak level was hit late last year at Rs3,620 after reports of an extensive damage to the standing crop owing to pest attack in the Punjab cotton belt.

"Both spinners and mills, notably those holding short positions were out to grab the floating stock irrespective of the asking prices", brokers said adding "if the current panic-like conditions prevailed prices could surpass the previous peak level".

Spinners and mills had been keeping to the sidelines for the last couple of weeks in an effort to induce ginners to lower their asking prices but ginners are "not that fools to fall in their trap".

Floor brokers said there could be some serious problems on the export front if the current price flare-up was carried over to the new year trading, which in turn could have negative impact on the total exports.

What seems to have terribly lowered the spinners options was an identical increase in international prices as the foreign stuff becomes more expensive after it lands here.

New York cotton futures are now staying firm above the 60-cent per lb level and their erratic price movements did not allow spinners to plan on a long-term basis, they said.

Official spot rates were upped by another Rs25 to Rs3,050 per maund without 15 per cent sales tax, but in the ready section most of the deals were done well above them.

Ready offtake was on the higher side as mills tried to corner the floating stock totalling about 10,000 bales, the following being notable among them: 2,000 bales, Haroonabad at Rs3,300, 200 bales, at Rs3,150, 1,000 bales, Khanpur at Rs3,150, 1,200 bales, Gilanwali at Rs3,150, 2,000 bales, Bahawalpur at Rs3,200, 2,000 bales, Lodhran at Rs3,250, 1,600 bales, Vehari at Rs3,200 and 400 bales, Nawabshah at Rs2,850.