Wheat Gluten market overview 2025 [Global Report]

The global milk market enters the end of 2025 in a state of pronounced oversupply, which has wiped out previous price increases and worsened sentiment across the supply chain. Production in key regions – the US, EU and Oceania – has reached its highest level in a decade, while demand, particularly in Asia, has slowed. As a result, farmgate prices are falling faster than production costs, undermining the profitability of farms and processors. The situation is further complicated by trade tensions between the EU and China and the US and regulatory pressures in Europe. In the face of these challenges, the dairy sector is accelerating restructuring and looking for new markets as it prepares for a difficult 2026 transition year.

Global analysis of the wheat gluten market

The year 2025 ends with the largest increase in global milk production in five years. According to Rabobank data, production in the seven major export regions (the ‘Big-7’) increased by 1.6% y-o-y, and a further, albeit slower, increase of 0.6% is forecast for 2026. With China reducing imports and India and Southeast Asia becoming increasingly self-sufficient, there is a surplus in the market that neither trade nor domestic consumption can absorb.

Raw material prices are falling on all continents. In the US, the ‘all milk’ price fell in the third quarter to around US$21/100 lbs, and the USDA forecast for 2026 is for a further decline to US$20.4. In the EU, the average farmgate price is now around €52-53/100 kg, compared to €56-58 in the spring, with Polish dairies reporting reductions of around €2-3 cents per month. On the global market, quotations for processed products (SMP, WMP, butter) remain under pressure – the FAO dairy index fell in September for the third consecutive month and GDT auctions remain at their lowest levels in two years.

Cost pressures remain high. Although energy and logistics prices have stabilised somewhat, farms continue to struggle with feed, fertiliser and credit costs. As a result, production margins are at their lowest since 2020. Many countries, especially in Central and Western Europe, are seeing the first decisions to reduce herds and merge smaller farms into larger cooperative units. Industry analysts speak plainly of the beginning of a new wave of dairy sector consolidation.

The demand side shows no signs of improvement so far. Consumers in the developed world – burdened by inflation and the high cost of living – are reducing their purchases of premium products, opting for cheaper milk and bulk cheeses. In Asia, on the other hand, after several years of rapid consumption growth, demand has stabilised at a lower level due to the economic slowdown and high domestic stocks in China.

The global market is becoming competitive to the limit. The US and New Zealand, struggling with their own surpluses, are increasing export activity, which is putting price pressure in Europe. The coming year 2026 will therefore bring not so much a rebound as a period of struggle to maintain liquidity and markets.

Regional analysis of the wheat gluten market

Europe

Europe remains the most important producer and exporter of wheat gluten, but 2025 was a period of increasing competition and margin pressure for the region. Leading processors in the European Union have had to adjust prices to lower global quotations while facing high energy and labour costs.

On the domestic market, demand remained stable, but exports – especially to North America and Asia – became more difficult. The appreciation of the euro against the dollar widened the competitive gap, and oversupply from other regions limited expansion opportunities.

The bakery sector is seeing a slight rebound, supported by stabilising flour prices and greater interest in higher protein products, while the ‘plant-based’ sector is seeing a decline in orders.

North America

The year 2025 marked a turning point for North America, with the region moving closer to self-sufficiency after years of import dependency. Several new wheat processing facilities have been commissioned in the past two years, significantly increasing capacity and changing the supply balance.

The greater availability of local product has reduced the need to import from Europe and Oceania, stabilising domestic prices, but at the same time leading to pressure on margins. US producers are increasingly targeting exports to Asia and South America, where demand continues to grow.

However, the US administration’s trade policy remains a factor of uncertainty. Higher tariffs on selected agricultural products from Europe, introduced in mid-2025, may indirectly affect wheat gluten flows, although the market hopes that the trade conflict will not extend to the processed protein segment.

Oceania

Oceania remains one of the main exporters of wheat gluten, supplying the product primarily to Asian countries. In 2025, the situation in the region was stable, although lower export prices and falling demand in China reduced the profitability of sales.

Processors are investing in improving energy efficiency and reducing emissions, gradually switching to renewable sources. This is an increasingly important element of competitiveness in international trade.

Asia

China, hitherto the engine of global demand, has clearly slowed down in 2025. Increases in domestic production capacity have reduced imports and importers have started to plan their purchases more carefully.

The bakery sector is still a large buyer of VWG, while the meat alternatives industry is seeing stagnation.

In Southeast Asian countries such as Indonesia, Malaysia and Vietnam, demand is growing, but at a moderate pace, driven by urbanisation and the development of modern retail.

In India, Bangladesh and Pakistan, gluten remains a niche product, displaced by local protein sources such as soya and legumes.

Middle East and North Africa

The MENA region remains heavily dependent on imports of wheat gluten. Europe, Australia and increasingly the United States remain the main suppliers.

Price pressures and the region’s strong sensitivity to the dollar exchange rate mean that supply directions often change depending on current market conditions. Demand from the bakery and food industry remains stable, but is not growing dynamically.

Trends and forecasts for 2026

The most important development in the wheat gluten market in 2025 is normalisation after years of growth. The market has moved from deficit to oversupply and producers are learning to operate in the new reality of low margins and fierce competition.

In 2026, the industry will enter a period of gentle stabilisation. Global demand is forecast to grow moderately, by 3-4% per year, mainly driven by the pet food, bakery and selected protein applications segments. At the same time, VWG prices are expected to rebound slightly in the second half of 2026 if the wheat market situation remains tight, especially in the Black Sea region and Australia.

In the long horizon (2027-2030), the wheat gluten sector is likely to accelerate again, driven by increasing demand for sustainable proteins and high-protein products. However, the balance between cost and added value will remain a key challenge. Producers who focus on quality, innovation and energy efficiency will maintain their edge.

“In 2025, the wheat gluten market has behaved exactly as commodity markets do after a boom. Too much new capacity came on stream too quickly. The result has been price pressure and falling margins across the chain, from processors to exporters. However, it is worth noting the permanent change in the supply structure. The start-up of US production is reducing North America’s reliance on imports, which could shift trade towards Asia and the Middle East in future years. A key factor for 2026 will be the relationship between the price of wheat and the cost of energy. If the Black Sea harvest turns out to be weaker and freight remains expensive, VWG prices could rebound. But it will not be a return to record highs”

Piotr Wieczorek

Partner at Foodcom S.A.

Foodcom Global Reports S.A.

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