CRUDE palm oil (CPO) prices are projected to reach RM4,000 per tonne by 2026.
The average price of CPO is expected to hit RM4,200 per tonne this year, following the high price premium enjoyed by palm oil over soybean oil in the first quarter of 2025, according to Kenanga Investment Bank Bhd.
The investment bank said CPO prices for 2025 have so far declined from the highs recorded in the fourth quarter of 2024, while the price premium over soybean oil has since disappeared.
It added that biodiesel demand has also declined, particularly in the United States, although buyers have been actively restocking.
“Overall, a supply deficit is expected to persist in 2025, with inventory levels likely to fall sharply year-on-year. As a result, prices are likely to remain firm, ranging between RM4,000 and RM4,500 per tonne.
“Our forecast for average CPO price is RM4,200 per tonne in 2025 and RM4,000 per tonne in 2026,” it said in a research note.
Kenanga Investment said it continues to favour the plantation sector for its defensive earnings, given that food consumption accounts for 70% of edible oil demand, with 23% used for biodiesel.
“Therefore, demand remains resilient with consistent annual growth, even amid global economic slowdown, protectionist trade policies, and geopolitical tensions,” it added.
The investment bank also said the plantation sector’s balance sheet remains strong, as many plantation companies hold net cash positions or manageable debt levels, with healthy margins supported by firm CPO and palm kernel prices. –TMR
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