KARACHI, Aug 5: Cotton prices on Tuesday eased further as reports of steady arrivals of phutti into the lower Sindh ginneries continued to inspire fresh selling by the ginners.

Reports that China is short of 0.6m bales as its crop was damaged because of floods early during the current season did not prove a bullish market factor as ginners were seized with the problem of disposing of the backlog of unsold stocks held up due to recent rain and transportation problems, dealers said.

However, an air of optimism prevailed among the private sector exporters of cotton, notably those having already business contacts with their Chinese trading partners.

But there is no fresh forward deal for the new crop as initial enquiries suggest most of the formal contacts are being revived, which in turn could pave the way for export contracts.

In mid-1970s, large quantities of lint cotton were shipped to China through the defunct Cotton Export Corporation (CEC), which at that time was entrusted with the job of selling exportable surplus to a number of countries, including China, market sources said.

“Whether or not the country will have an exportable surplus in the backdrop of reports of damage to standing crop in the lower Sindh cotton belt will be known during the next couple of weeks,” they added.

Spinners who were worried about the supply position during the post-rain sessions were relieved a bit as prices are easing despite reports of damage to crop during the current spell of monsoon rain.

The other positive development, which could keep spinners competitive on the world textile markets, is reports of falling prices of the New York cotton futures which are declining for the last couple of sessions on speculative trade selling followed by reports of higher US crop projections.

Meanwhile, report of fresh rain in the upper Sindh cotton after a week’s gap are said to be beneficial for the standing crop.

Official spot rates were lowered by Rs5 at 2,475 per maund, while New York cotton futures were quoted further lower by 0.40 and 0.43 cents per lb at 55.95 and 57.48 cents per lb for both the ruling October and the distant December settlements, respectively.

Ready offtake was light as till late in the evening about 1,000 bales of new crop changed hands as under: 600 bales, Mirpurkhas at Rs2,450; 200 bales, Pithoro also at the same rates; 200 bales, ginned from the Sindh phutti, Burewala at Rs2,560; and 200 bales, Chichawatni at Rs2,570.