Turkey, the biggest importer of US upland cotton last year, buying 1.1 million bales worth about $500 million announced the investigation into possible dumping of US cotton in the country, the US government and an industry group said, the third dispute over US cotton in recent years and a sign of rising tensions in global trade as prices sink.

The move was significant for several reasons. It came just four days after the US regulators cleared the way for a 1.25 percent anti-subsidy duty on Turkish imports of steel rebar, which is used to reinforce concrete. The US National Cotton Council (NCC) said that the probe was initiated by the government, not at the request of the Turkish cotton industry.

It also comes at a critical time for Washington-Ankara relations, which have been strained by Turkey's reluctance to play a front-line role in the fight against Islamic State on its Syrian border. Last Thursday, cotton industry officials held a call with the US Trade Representative, Department of Commerce, Department of Agriculture, and International Trade Commission (ITC), the NCC said.

It is not clear when Ankara will complete its probe, although US exporters have 37 days from October 18 to respond to questions from the Turkish government as part of its research. Turkey has a track record of moving fairly quickly on these types of cases, concluding some in as little as six months.

The case comes as the world's cotton farmers struggle with weak prices, which have plunged by a third since May on forecasts of another record surplus and falling demand from China, the world's top textile market, as Beijing overhauls its stockpiling policy. Stress between major trade partners has also mounted. Earlier this month, the NCC accused Beijing of breaching global trade rules through its farming policy.

This is the first major dispute over US cotton since Peru looked into possible dumping and countervailing in 2012-13. At the start of this month, the United States and Brazil settled a decade-old World Trade Organisation dispute over US cotton subsidies for $300 million.

In a letter sent to a US exporter and seen by Reuters, the Turkish ministry of the economy states that it would look into unfair competition in imports of "non carded or combed" cotton originating from the United States.