KUALA LUMPUR: CIMB Securities Sdn Bhd expects the recent softness in crude palm oil (CPO) prices to be temporary, despite concerns over potential delays in Indonesia’s 2026 biodiesel mandate and US biofuel policy.
The firm projects Malaysian palm oil stocks to rise 4.0 per cent month-on-month (MoM) to 2.57 million tonnes in November 2025, driven by a 10 per cent decline in exports, while production is expected to fall 8.0 per cent MoM to 1.88 million tonnes, following a peak in October.
Malaysian palm oil exports fell 12.3 per cent MoM to 459,320 tonnes in the first 10 days of November.
CPO prices averaged RM4,412 per tonne in October, bringing the 10-month 2025 average to RM4,330 a tonne, in line with CIMB’s full-year forecast.
However, current spot prices have weakened to RM4,110 per tonne, with three-month futures at RM4,107 per tonne, reflecting concerns over Indonesia’s biodiesel funding and the delayed US biofuel policy review amid the ongoing government shutdown.
Despite these factors, CIMB Securities said palm oil supply likely peaked in October and is expected to trend lower from November through February 2026.
The recent price decline has also made palm oil more competitively priced against rapeseed and sunflower oils and on par with soybean oil.
“Furthermore, the recent reciprocal trade agreement with the US, which grants palm oil tariff exemptions, should support CPO demand from the US.
“We maintain our “Overweight” rating on the sector, with key catalysts including firmer-than-expected CPO prices and Indonesia’s planned B50 biodiesel implementation in mid-2026,” the firm added.
Meanwhile, Public Investment Bank Bhd (PublicInvest) expects stronger results in the upcoming third-quarter reporting season, despite muted production growth for most plantation companies under coverage.
It noted that stronger CPO prices—up 5.0 per cent quarter-on-quarter and 6.8 per cent year-on-year—are expected to support earnings, with SD Guthrie leading the pack thanks to industrial land monetisation and higher upstream plantation earnings.
However, the firm warned that a continuous crackdown in Indonesia has added uncertainty for plantation players with regional exposure.
“The crackdown ordered by President Prabowo Subianto is the biggest structural change in Indonesia’s palm oil industry and has brought a total of five million hectares under military scrutiny.
“That is about 30 per cent of the country’s total planted area of 16.83 million hectares, with the top 10 provinces accounting for 88 per cent of the overall plantation area.
“This could create various uncertainties for the local plantation players who have a footprint in Indonesia,” it added.
The firm maintained its “Neutral” stance on the sector, with a full-year CPO price forecast of RM4,200 per tonne.
© New Straits Times Press (M) Bhd
