ICE cotton futures fell to their lowest in nearly two weeks on Monday on worries that an escalation in US-China trade tensions could hamper Chinese demand for the natural fiber.

The cotton contract for July settled down 1.51 cents, or 2.7%, at 54.33 cents per lb. It traded within a range of 53.85, its lowest since April 22, and 55.8 cents a lb.

Prices had climbed to a 1-1/2-month high on Thursday helped by a federal export sales report that included 422,378 running bales of sales to China for 2019/20, its largest weekly purchase for a current marketing year since June 2012.

“The market is not going to be able to rally on Chinese sales because the Chinese-US relations are deteriorating so rapidly that the odds of some big sale getting shipped in the distant future are very low," said Ed Jernigan, chief executive of Jernigan Global, a cotton textile supply chain manager.

US Secretary of State Mike Pompeo said on Sunday there was “a significant amount of evidence" that the new coronavirus emerged from a Chinese laboratory, but did not dispute US intelligence agencies' conclusion that it was not man-made.

“Large purchases by China seem likely to hinge on mitigation of tensions between the US and China regarding blame for the Wuhan pandemic" Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group said in a note.

“If China does buy over 4 million bales of US cotton for its strategic reserve, such could be seen as a game changer with respect to ICE futures."

Global coronavirus-led restrictions and lockdowns has sapped demand for the natural fiber and apparel, with cotton prices declining 23% so far this year.

Speculators trimmed their net short position in cotton futures by 2,712 contracts to 11,485 in the week to April 28.

Investors now await a cotton planting progress report due later in the day.

Total futures market volume fell by 3,126 to 20,268 lots. Data showed total open interest fell 425 to 175,096 contracts in the previous session.