Page 14 - TEXtalks International June/July-2025

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EU council and Parliament strike

deal on simplification of CBAM

The European Union has reached an agreement to simplify its Carbon Border Adjustment Mechanism
(CBAM), aiming to ease the process for small and medium-sized enterprises (SMEs) while keeping
environmental goals intact. The deal introduces a threshold exempting importers who bring in less than 50
tonnes of emissions per year, which means around 90% of importers will not have to comply
with CBAM rules.

Despite this exemption, the mechanism will still cover almost all emissions from imports of key industries like
iron, steel, aluminium, cement, and fertilisers. The simplification also includes easier authorisation
processes, simpler ways to calculate emissions, and better handling of financial responsibilities
for importers.

The deadline for buying CBAM certificates has been moved to February 2027, giving businesses extra time
to prepare. The European Parliament approved the agreement with overwhelming support, and the Council
of the EU had already agreed to it. Once formally adopted, the European Commission will review the
possibility of extending CBAM to other sectors at risk of carbon leakage in early 2026. This deal balances
environmental protection with practical business needs.

ICE cotton futures edge up

amid weaker dollar; market

remains rangebound

ICE cotton futures experienced a modest uptick on Monday, supported by a weaker US dollar that enhanced
the competitiveness of US cotton in international markets. The December 2025 contract closed at 65.05
cents per pound, marking a 0.18-cent gain, while the July 2025 contract settled at 65.44 cents, up 0.08 cent.
Despite this slight increase, the market remains rangebound, with limited momentum for a breakout.

The softer US dollar made cotton purchases more affordable for overseas buyers, providing some support
to the market. However, trading volume decreased to 50,092 contracts, down from 65,985 contracts the
previous day, indicating a slight reduction in market participation. Speculators increased their net short
positions by 5,999 contracts to 67,935 contracts in the week ending June 10, suggesting a cautious outlook
among traders.

On the supply side, slower US crop progress and a dip in Brazil’s cotton exports could influence future price
movements. The USDA’s weekly export sales report for the week ending April 17 indicated that net sales for
the current marketing year totaled 104,000 bales, down 49% from the previous week and 22% below the
average of the last four weeks. Notably, net sales to mainland China declined by 5,300 tons, suggesting a
reduced demand from a significant buyer.

June/July 2025