InfoSAWIT, KUALA LUMPUR – RHB Research is reassessing its 2026 crude palm oil (CPO) price assumption previously set at RM4,250 per ton, following Indonesia’s decision to raise export levy rates on CPO and processed products effective 1 March.
In its latest research note, RHB said Indonesia’s export levy hike—CPO increased to 12.5% from 10%, while processed products rose to 10% from 7.5%—could reshape global supply and demand dynamics. The policy is aimed at supporting the sustainability of Indonesia’s mandatory biodiesel program B40 through 2026.
“We will revisit our supply-demand projections following this development, and re-evaluate our 2026 CPO price assumption of RM4,250 per ton,” RHB Research wrote, as quoted by InfoSAWIT from New Straits Times, Monday (19/1/2026). The firm also said it would adjust its earnings forecasts for plantation companies to reflect the new tax structure.
B40 Maintained, B50 Postponed
According to RHB, Indonesia has decided to maintain B40—blending 40% palm oil-based biodiesel with 60% diesel—this year. The planned move to B50 has been postponed due to technical challenges, particularly in transportation sectors such as railways, heavy equipment, and industrial engines.
The decision was also influenced by Indonesia’s increased domestic diesel production capacity. The government is expected to continue further trials before setting a new timeline for B50 implementation.
Despite this, funding requirements for B40 remain high. Therefore, Indonesia chose to increase the export levy as an additional financing source.
Higher Export Levy Pressures Indonesia-Based Planters
RHB Research noted that plantation companies with Indonesia-based operations are likely to be the most impacted from March onward. The higher export levy is expected to reduce the effective average selling price (ASP), narrowing margin space.
This development also prompted RHB to recalibrate its supply-demand outlook. Under its previous assumptions, the firm had projected an additional allocation of around two million tons of CPO for B50 needs in the second half of 2026.
With the new levy rate, Indonesia’s biodiesel funding pool is expected to improve. RHB estimated that the policy could generate a surplus of US$135 million, compared with its earlier scenario that risked a deficit of up to US$448 million if the export levy had not been raised.
Neutral Stance, Prefers Malaysia-Oriented Names
Overall, RHB maintained a “Neutral” recommendation on the plantation sector, but said it favors Malaysia-oriented players such as Johor Plantations Group Bhd, Sarawak Oil Palms Bhd, IOI Corp Bhd, and SD Guthrie Bhd.
For companies focused on Indonesia, RHB highlighted London Sumatra Indonesia and First Resources as its preferred picks.
The export levy hike is expected to become a key driver shaping palm oil market dynamics in 2026—prompting analysts, industry players, and investors to reassess pricing direction and market fundamentals. (T2)
