Key inflation indicator, 30-year high 1:01
New York (CNN Business) -
Cotton prices jumped to new 10-year highs on Tuesday, joining a long list of booming commodities and commodities.
Cotton futures rose 4% to nearly $ 1.09, the highest level since September 2011. The commodity has risen 22% in the last two weeks alone.
The rise in cotton could end up having an impact on consumers in the form of higher prices for jeans, T-shirts and other clothing.
Consumer apparel prices were already on the rise, and a rebound in cotton futures could push them higher.
Garment prices rose 4.2% during the 12 months ending in August, according to the government's inflation report.
Prices rose even more for men's shirts and sweaters (4.4%), men's pants and shorts (6.6%) and women's dresses (11.9%).
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Several factors push up the price of cotton
Analysts blame cotton's rise on several factors, including extreme weather.
Droughts and heat waves have wiped out cotton crops in the United States, the world's leading cotton exporter.
"It's a tight situation. The planting season has not gone so well," said Robert Yawger, director of energy futures at Mizuho Securities.
Yawger said Wall Street traders have pushed cotton prices higher in recent days.
"All the speculators started to intervene, exacerbating a tight market," he said.
At the same time, demand has been very strong, especially from China.
Strong demand from that country could reflect a side effect of US trade policy.
Inflation in the United States fell slightly in August but remains at high levels
In December 2020, the Trump administration blocked US companies from importing cotton and cotton products originating from China's western Xinjiang region due to concerns about forced labor.
Analysts say those sanctions, which remain in effect during the Biden administration, have caused some Chinese companies to buy US-grown cotton, make goods from it, and then sell the products back to the US and other markets.
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