KARACHI, Aug 5: Physical business on the cotton market on Thursday was modest as spinners were not inclined to make fresh commitments at the rising prices.

The underlying sentiment was further influenced favourably to reports that the government has directed the Trading Corporation of Pakistan to purchase 0.1 million bales from the open market to ensure a fair price to the growers and stabilize prices.

However, it was not clear whether or not the TCP will purchase that amount from the unsold stocks of the current crop lying with the ginners or from the new crop, dealers said.

It was, however, interesting to note that the official decision is expected to keep price stable on a economically viable levels suited to all sectors of the cotton economy, they added.

The absence of the TCP from the market in the last season created crisis-like conditions as prices soared to an all-time record of high of Rs3,650, pushing the textile sector to the receiving end, market sources said, adding "they have to import about 2.2m bales to make up the local crop shortfall."

In the ready section, stray business was reported as needy spinners lifted modest lots of the new crop form the lower Sindh cotton belt at further higher levels. Some of the deals in the new crop were done at Rs2,350 per maund as reports of fresh rain in some parts of the lower Sindh cotton belt suspended picking operations in the cotton fields, brokers said.

They said arrivals of phutti were showing a considerable decline as the growers were holding on to the stocks followed by predictions of fresh increase in prices in sympathy with foreign markets.

Official spot rates consolidated the overnight gains but on the other hand, New York cotton future failed to sustain the previous run-up and fell by 0.51 and 0.47 cents per lb at 44.95 and 45.48 cents per lb for the ruling October and the distant December settlements, respectively.

Ready off take was light totalling about 1,000 bales of the new crop from the lower Sindh ginneries as under: 200 bales, Mirpurkhas at Rs2,325; 400 bales, at Rs2,350; and 200 bales, Khipro also at this rate.