As we enter June 2025, the starch processing industry in Europe is navigating a complex environment characterized by economic challenges and geopolitical tensions. The landscape is continually evolving, influenced by fluctuations in raw material availability, energy costs, and market demands. This article illuminates the various factors shaping the starch and starch derivatives market, offering insights into the challenges and opportunities influencing the industry.
Managing Cost Pressures
The European starch processing industry is under significant strain from persisting cost pressures. Grain market prices remain volatile and high as the availability of high-quality grains remains scarce in the EU. Despite favorable growing conditions for the new crop, weather market, geopolitical uncertainties and short fund positions continue to maintain volatility in the grain market. The grain supply chain faces disruptions, with good quality non-GMO corn and wheat availability being notably limited, leading to increased sourcing costs for starch and starch derivative processors.
Energy costs continue to weigh heavily on the industry, it is more volatile on the back of geopolitical tensions in Israël/Iran. After rising sharply it recently came back down following the cease fire announcement end of June but it remains twice as high as pre-war levels.
The freight market continues to bear elevated costs, with a steady rise in truck transport expenses across the European Union (EU). This is largely due to a driver shortage and sustainability policies which are pushing operational costs higher. International Overseas shipments, remain historically elevated, despite improvement of the situation in the Red Sea, most international companies continue to prefer routing through the Cape of Good Hope due to safety concerns. The World Container Index decreased but it remains 46% more expensive than the average rate in 2019. This further complicates logistics and cost management for starch processors. Other costs, including those for chemicals, packaging, labor, and maintenance, continue to exert pressure on processors.
Economic Outlook: rising market uncertainties
Global economic prospects are weakening, with substantial barriers to trade, tighter financial conditions, diminishing confidence, and heightened policy uncertainty projected to have adverse impacts on growth. The IMF (International Monetary Fund) downgraded their forecasts in April, with the world’s real GDP growth revised downward by 0.5 points in 2025 and EU’s GDP growth expected to remain limited for 2025 (+0.8%). However, global inflation is expected to continue moderating it is expected to remain above 2% in the EU which will continue influencing consumers’ purchasing decisions.
Rising market uncertainties is weighing on the global macroeconomic environment which is expected to impact businesses and households. The starch industry is evolving in a less predictable market environment and must remain vigilant, adapting strategies in response to these economic shifts.
Dynamics of Starch and Starch Derivatives Market
The starch and starch derivatives market is on a gradual path to recovery. After experiencing a year of weak consumption in 2023, demand has partially recovered in 2024 and we expect it to continue its course at a slower pace due to the rising macroeconomic uncertainties this year.
The two main outlets for starch and starch derivatives, the food and paper & board industries are showing steady growth with modest improvement so far this year in Europe, enhancing usage of starch derivatives by 1% over the first quarter of 2025 compared to same period last year according to our internal analysts.
The market for starch and starch derivatives is evolving, influenced by changing consumer purchasing preferences and technological advancements in production processes. As processors work toward balancing rising costs with market demands, investment in innovation and sustainability remains critical for maintaining competitiveness.
Conclusion
The European starch processing industry continues to navigate a complex environment, characterized by ongoing cost pressures and quality challenges. Yet, there is resilience and adaptability in the sector, with processors leveraging innovation and strategic sourcing to mitigate these challenges. Roquette remains committed to delivering high-quality products and solutions, addressing the dynamic needs of the starch and starch derivatives market, and supporting industry stakeholders in navigating this complex landscape.