InfoSAWIT, KUALA LUMPUR – Malaysia's crude palm oil (CPO) inventory is expected to continue to rise in the coming months, driven by increased production and more favorable harvest patterns. However, various research firms project that the total national stock will remain below the two million ton threshold, reflecting a relatively tight market.
Recent data shows that Malaysia's CPO stock at the end of March rose by 3.5% month-on-month to 1.56 million tons, although it was down 8.8% compared to the same period last year. This marked the first monthly increase since September 2024.
According to a New Straits Times report on Thursday (7/8/2025), CIMB Securities explained in its research note that the stock surge was primarily due to increased output. Palm oil production in March reached 1.39 million tons, up 17% month-on-month but down a slight 0.4% year-on-year. This figure slightly exceeded the five-year average for the same month, which was 1.38 million tons.
"The increase in production was mainly driven by better weather conditions," CIMB stated in its note. The firm also anticipates that stocks will rise by about 7% in April, driven by higher crop yields and reduced domestic consumption.
However, from a pricing perspective, CIMB maintains a negative short-term outlook. Trade tensions between the United States and China, as well as a sharp drop in global crude oil prices, are seen as risks that could pressure CPO prices.
"Retaliatory tariffs from the US and China have the potential to slow global economic growth and reduce overall commodity demand," CIMB explained. Low crude oil prices are also seen as a threat to the sustainability of the biodiesel program, which has been a key driver of CPO demand.
Despite this, CIMB maintains its projection for the average CPO price this year at RM4,200 per ton but expects prices to be slightly weaker in the second quarter of 2025, at around RM4,726 per ton, as supply increases.
The firm also gave an "Overweight" recommendation on the agriculture and forestry sectors, indicating a positive outlook for stocks in these areas. (T2)
