Analysts foresee firm CPO prices ahead on improved demand

Reference: MALAYSIA SUN, VOLUME NO. 0205/16

KUALA LUMPUR, Sept. 12 (Xinhua) -- Analysts recently predicted stable crude palm oil (CPO) prices in the future, despite weak exports from Malaysia.

CGS International mentioned in a note that it remains neutral on Malaysia's plantation sector, as the ample global supply of vegetable oil and weak demand fundamentals are likely to limit significant increases in CPO prices.

"However, we anticipate a potential rise in CPO prices in the fourth quarter, possibly driven by stronger-than-expected demand related to U.S. biofuel mandates," the research house stated.

It highlighted that Malaysia's palm oil inventory rose to 2.2 million tons in August, aligning with market expectations, due to higher CPO production and weak exports.

Meanwhile, Kenanga Research noted on Thursday that firm palm oil prices are expected to continue into 2026.

The research house indicated that the 2025 edible oil supply is projected to lag behind the long-term demand growth of 3 percent to 4 percent year-on-year.

"For 2026, supply is expected to improve slightly more than in 2025, at around 2 percent to 3 percent year-on-year, but still below the 3 percent to 4 percent demand growth trend," it explained.

Therefore, it suggested that edible oil prices, including palm oil prices, should remain relatively stable given the flat year-on-year inventory moving into 2026.

On the other hand, Hong Leong Investment Bank maintained its 2025 to 2026 CPO price estimates of 4,200 ringgit (995 U.S. dollars) per ton and 4050 ringgit per ton.

"We believe CPO prices will stay subdued in the third quarter, before becoming more optimistic towards the end of 2025," the research house commented.

According to Hong Leong, the upward trend in palm oil stock levels is likely to persist into September, as seasonally higher restocking activities are expected to be affected by seasonally increased cropping trends and palm's reduced price competitiveness compared to soybean oil. (1 ringgit equals 0.24 U.S. dollars)