KARACHI, Feb 4: Cotton prices on Tuesday tended further higher as fears of a short crop continued to inspire strong mill buying but ginners were reluctant sellers and held on to their positions.

But in physical trading there was a virtual run on the floating stock as ginners further raised their asking prices. Some of the needy mills were obliged to buy selected lots at Rs2,350 on credit for post-Eid delivery.

Reports that a ginner has purchased fine quality phutti from a southern Punjab grower at Rs1,225 per 40 kg has sent shock waves among the ginners, signalling an imminent price flare-up.

It was billed as the peak rate for the last over a decade, the previous high was touched at Rs1,300 per 40 kg in late 80s, when the total cotton crop fell below the 8m bales mark owing to pest attack.

“We are eyeing the near-term price level of Rs2,400 per maund possibly after the Eid holidays,” one ginner says “by that time next fortnightly arrival figures will be available giving a fair idea to both the buyers and sellers how to behave in future cotton trading”.

Spinners are also not so keen to go beyond certain limits owing to delivery problems because of shortage of cargo haulers.

“Most of the leading cargo haulers are busy in transporting sacrificial animals from the upcountry to the city at much higher fares and refuse to lift other consignments”, market sources said.

The delivery problem will persist both during the pre- and post-Eid sessions because of non-availability of transport. It also curtails daily ready business as spinners make selective purchases only for those lots, which could be transported to their mills.

But the current persistent increase in prices is largely attributed to supply and demand factors and ginners perceptions of a short crop based on the slowdown of arrivals of phutti.

Floor brokers ruled out the possibility of holding back of phutti stocks by the growers as the current rates above Rs1,000 per 40-kg for the fine and contamination-free stocks and around Rs825 for inferior ones are attractive enough keeping in view the production costs.

Moreover, the quality of phutti gets damaged if it stored for a longer period without taking protective steps, which are very expensive, they said.

“The bulk of phutti is already in the ginneries and the ginners have a fair idea of the total crop”, brokers said “the slowed down in their selling offers reflects that they intend to sell their stocks at much higher levels”.

It was perhaps in this background that official spot rates were revised upward by Rs10 at Rs2,235 per maund in line with the ready prices.

New York cotton futures on the other hand eased modestly at 52.18 and 56.23 cents per lb for both the ruling March and the distant May settlements, off 0.18 and 0.9 cents per lb.

Ready offtake was light owing to higher asking prices totalling about 5,000 bales, the following being some of the notable deals:

SINDH TYPE: 1,200 bales, Gothki, Dharki, Mirpur Mathelo, at Rs2,325 delivery after Eid holidays, 400 bales, Dharki and Khanpur Mehar at Rs2,350 on one-month credit and 400 bales, Kandario at Rs2,240.