Cotton futures are trading at their highest price point in about 10 years, in part as a response to the increased Chinese demand as U.S. exports to the communist nation grow, according to a report.
The U.S. cotton futures that were most active traded -0.61% on the Intercontinental Exchange and on the pound grew 0.4% to $1.05 on Monday.
The price point is at its highest since September 2011, and the growth experienced in the past 10 sessions could see prices in clothing increase, the report stated.
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Former President Donald Trump banned the import of Chinese cotton clothing and similar products from the nation’s largest cotton-producing region after the United States said it found the items were the product of forced labor in Xinjiang Uygur Autonomous Region, according to the report.
“If you can’t use cotton from the Xinjiang Uygur Autonomous Region, you’ll need to import more cotton and yarn,” said Peter Egli, head of risk management at Plexus Cotton Ltd.
However, the U.S. announced Monday it would start fresh trade negotiations with the communist nation, said Katherine Tai, a U.S. trade representative.
China primarily imports cotton from the U.S. to be used in manufacturing return goods, the report said.
U.S. cotton exports to China are 83% higher since the new market launch on Aug. 1, according to the U.S. Department of Agriculture.
“China is becoming more active in the global market,” said Jack Scoville, an analyst at Price Futures Group.
Power outages have reportedly damaged the communist state and could force production to cease to save energy.
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China’s manufacturing enterprise contracted in September, concluding an expansion period of 18 straight months, according to the report.
