KARACHI, Aug 13: Cotton prices on Friday fell further partly in sympathy with steep decline in the New York cotton futures and partly to steady arrivals of phutti into the lower Sindh ginneries.

But the physical activity remained at a standstill as ginners were not inclined to sell at the lower prices after having purchased phutti at much higher rates, brokers said.

Some of the deals in the ready section were finalized at Rs2,200 as compared to an average overnight rate of Rs2,300. "A crisis-like situation is developing in the cotton trade in the backdrop of higher US production figures followed by heavy speculative selling on the New York Cotton Exchange", they said.

New York cotton futures on Thursday fell to a record low of 43.02 and 43.85 cents per lb, off 1.86 and 1.61 cents for both the ruling October and the distant December settlements respectively, sending shock wave in the entire cotton world.

Market sources said although growers continued to dump phutti into the ginneries but ginners were forcing them to fix the selling price so that they could sell lint to the spinners after adding out overheads.

"Indications are that growers may hold back their stocks if prices fell further both on the local and the international markets and that could create crisis-like conditions in the ginning sector", they fear.

The local market trend will largely depend on the New York cotton futures as spinners work out their export parity levels on average rates. "Unsold stocks of cotton yarn are piling in our godowns owing to uncertain world market and importers' reluctance to place fresh orders", spinners say "foreign buyers are awaiting the return of sanity on the world markets, which is now under the squeeze of speculative forces".

There could be further softening in the local prices if the New York cotton futures did not recover from the current lows during the two local closures, they said. Official spot rates were marked down by Rs50 per maund in line with the ready rates at which physical business was being done.

Ready off take was light totalling 2,000 bales as ginners were not inclined to lower their asking prices. The following are some of the deals: 1,000 bales each, Sultanabad and Mirpurkhas at Rs2,200.