Cotton in the US has been selling at record highs not seen in four years.

One reason is the looming trade war between the United States and China. But the trade climate is not the only culprit driving up prices. One of the largest threats to California’s cotton industry has been a lack of water. This year’s water supply doesn’t look promising for California’s cotton crop.

But this dry spell isn’t limited to California. Other regions of the country like Texas are affected as well.

With these dry conditions, farmers are cautious about growing and their lenders aren’t as generous. But there is still a bit of hope for this cotton season. While 2018 hasn’t delivered a lot of rain in certain regions, other threats from last year—such as insect infestations—seem to have been resolved.

China’s cotton imports from the United States have fallen over the years from approximately 40 per cent to 15 per cent to 20 per cent. China is an important customer of US cotton, and has been for the past two or three decades, but the US has been shipping more cotton to other locations over the last few years.

With US cotton exports expanding to other countries, the market has opened up more. Last year, the US saw its second-highest cotton export yield.