InfoSAWIT, KUALA LUMPUR – Kenanga Investment Bank Bhd projected crude palm oil (CPO) prices will trade around RM4,000 per ton throughout 2026, lower than the RM4,308 per ton average recorded in 2025. The forecast is based on the outlook that global vegetable oil supply remains tight, despite a potential increase in supply next year.
In a research note released Friday (16/1), Kenanga said any stock build-up is expected to remain insufficient to drive meaningful inventory recovery. Meanwhile, cost pressures are starting to surface, though upstream margins are still projected to stay manageable.
Upstream Margins Manageable, Downstream Visibility Still Weak
Kenanga noted that downstream prospects remain uncertain, while non-plantation contributions such as property and renewable energy may become more visible for integrated plantation groups.
“Downstream visibility remains weak, but non-plantation contributions from property and renewable energy could be more meaningful. Therefore, within integrated plantation groups, the focus is increasingly shifting toward improving asset yield,” Kenanga wrote, as quoted by InfoSAWIT from The Edge Malaysia, Monday (19/1/2026).
Impact of Indonesia’s Low Productivity Still Felt
Kenanga said Indonesia’s weak productivity in 2024 contributed to a sharp rise in CPO prices to RM4,700–RM4,800 per ton from Q4 2024 through Q1 2025. After that, prices were seen stabilizing and returning to around RM4,000 per ton.
In addition to weather and production factors, Indonesia’s biodiesel policy remains a key market focus. Kenanga highlighted that Indonesia’s decision to maintain B40 while delaying B50 implementation until after mid-2026 supports a more cautious price outlook.
Kenanga Maintains ‘Neutral’ Stance on the Plantation Sector
Kenanga maintained a “neutral” recommendation on the plantation sector, citing limited upside catalysts and constrained growth opportunities. However, earnings conditions are still viewed as healthy, supported by relatively strong balance sheets and valuations that are not overly expensive.
Kenanga added that smaller players may offer attractive valuations, but large, integrated and diversified plantation groups are expected to be more resilient should palm oil prices weaken. (T2)
