KARACHI, June 23: Physical business on the cotton market remained light as spinners kept to the sidelines, anticipating decline in local prices in sympathy with fresh steep fall in New York cotton futures.

Although bank demands on ginners because of year-end closing are mounting no one among them is inclined to lower asking prices, which in turn has negative impact on the ready offtake.

Ginners said banks were sending repeated notices to adjust overdraft limits to qualify for the next year but they had no money to adjust them as about Rs6 billion was tied to the unsold stocks.

Stray lots are changing hands between Rs3,000 and Rs3,150 per maund depending on the quality premiums but falling volume indicate the ginners are not inclined to sell at a loss and prefer to hold on to their unsold positions for some better times.

"The delay in resumption of ginning operations by the lower Sindh ginners, that is from August, is apparently meant to give a breathing space to those ginners to sell their unsold stocks before the new crop arrives in the market," brokers said.

"In normal conditions lower Sindh and central Punjab ginners resume operation by the middle of July." Some of the central Punjab ginners who are making forward deals for July 15 against lint ginned from Sindh phutti may follow the decisions taken at the Karachi meeting by the Pakistan Cotton Ginners Association and will stop purchasing phutti from lower Sindh brokers.

Market sources said the step had been taken to forestall an speculative price hike in phutti prices during the current season and in turn supply lint to mills at a competitive rate.

During the current season phutti prices had shot up to all-time high of Rs1,750 per maund, pushing the lint price to Rs3,650 amid reports of damage to the crop owing to late pest attack, they said.

New York cotton futures on Tuesday finished with fresh setback of 1.69 and 1.11 cents per lb for both the ruling July and the new crop October settlements at 48.40 and 51.45 cents, respectively.

The local official spot rates on the other hand remained basically unchanged from the overnight levels in the absence of physical trading. On the ready counter, 800 bales from a Dharki ginnery changed hands at Rs3,150 per maund.