With improved demand from local mills for quality cotton, prices continued to increase during the last fortnight of January, sources in South India Cotton Association (Sica) said.
However, lack of support from financial institutions and spiraling prices had put the end users in a fix for liquid funds, the sources said.
The cotton trade associations, which met recently at Indore, had projected a lower crop production of 160 lakh bales against the estimated 169 lakh bales by the Cotton Advisory Board.
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With the supply position likely to become clear within a week, a realistic crop assessment could be made only by February 15, the sources added.
The prices recorded a firm tendency in Punjab, Haryana and Rajasthan because of improved demand from local mills.
J-34 saw ginned was quoted at Rs 2035 to Rs 2100 per maund for spot delivery.
However, the arrivals, estimated to be about 19 lakh bales including Bengal Desi, were less compared with last year.
Though the supply position improved in Gujarat, the demand from mills was yet to gain momentum, and prices witnessed a mixed trend, the sources said.
The Maharashtra Cotton Federation increased cotton lint prices following good demand during the period with total pressing from the entire Maharashtra belt crossing four lakh bales, the sources said.
The federation had also been given an extension for the shipment of one lakh bales of cotton for the 1996-97 season by the Textile Commissioner.
Despite increased arrivals, prices remained firm with very few transaction of h4, Mech varieties in Madhya Pradesh.
H-4 was quoted at Rs 20,500-21,000 per candy spot during last week.
In Andhra Pradesh, prices showed a mixed trend with more arrivals from Guntur and Prakasam areas.
However, the arrivals were limited from the Warangal belt due to damages. The arrivals of MCU5, LK, RCH and Mech-1 varieties were reportedly around nine lakh bales till the middle of January.
In Karnataka, prices witnessed an upward trend due to increased demand for quality lots of DCH 32 with spot purchase rate touching Rs 32,500 per candy.
It was also reported that many mills had arranged import of Egyptian cotton due to the reduced supply situation, the sources said.
In Tamil Nadu, the winter crop was expected to be much less compared with last year following late and heavy rains.
The new crop of MCU5, IRA, RCH and DCH had started arriving in the market.
Prices were ruling firm with lesser transactions.