Tapioca starch: High costs and limited production keep prices firm in Thai and international markets.

Since June, the international price of cassava starch has risen to a high level. Prices increased significantly in the first ten days of June, while remaining relatively stable in the middle and latter parts of the month. High raw material procurement costs and limited cassava starch production are the main drivers of the price increase. As of June 29, the mainstream intended transaction price for Thai cassava starch was $650-700/ton FOB, an increase of $50/ton compared to the same period last month, representing an 8% increase, and a year-on-year increase of 73.08%.

Limited Cassava Supply in Thailand Keeps Prices High

Southeast Asian fresh cassava production is expected to decrease in the 2025/26 season. Furthermore, political factors in Thailand, Cambodia, and the Middle East have further reduced the local supply of cassava, leading to a continuous rise in purchase prices after the market entered the market. Since June, cassava prices have remained high. As of June 29th, some factories in Thailand were quoting 3.50-4.00 baht/kg for fresh cassava (25% starch content), an increase of 0.10 baht/kg compared to the same period last month, representing a 2.74% increase, and a year-on-year increase of 89.87%. Therefore, the rising price of raw cassava, significantly higher than the same period last year, has put pressure on factory costs and provided strong support for international cassava starch prices.

Thai factories are reducing their production capacity, resulting in limited cassava starch output.

Thailand faces tight cassava supply and transportation constraints, making procurement more difficult. Due to the unreliable raw material supply, factories are operating intermittently or halting production, leading to a gradual decrease in the number of factories operating in June. According to Zhuochuang Information, the average number of Thai factories operating in June is estimated at 58, approximately 56.31% of the total, a decrease of 6.80 percentage points from May and 18.45 percentage points from the same period last year. Overall, Thai cassava starch production is limited, with a year-on-year decrease of around 30%, and factories are clearly maintaining a firm stance on prices.

Weak downstream demand makes it difficult for Thai cassava prices to rise in July.

From a cost perspective, Thai cassava supply is limited, and starch content decreases during the rainy season. Procurement of high-quality cassava will be difficult in July, and prices are likely to remain high, making it difficult to alleviate cost pressures on factories. From a supply perspective, raw material supply is not guaranteed, and new cassava starch production in July is limited. Some factories may have small inventories, but these are insufficient to create pressure. From a demand perspective, there is a significant price inversion between domestic and international markets, and traders are not very active in importing, focusing mainly on depleting existing inventories, making it difficult to stimulate downstream demand. In summary, international demand will remain weak in July, and overseas prices may lose upward momentum. Under prolonged market fluctuations, some factories may soften their price-holding stance and may even lower their quotes. However, supported by high costs and limited production, the potential for a significant price drop in Thai cassava in July is expected to be limited, possibly within $20/ton.