InfoSAWIT, KUALA LUMPUR – Malaysian plantation company SD Guthrie Bhd remains optimistic that rising crude palm oil (CPO) prices will offset increasing production costs, amid persistently high energy prices driven by prolonged geopolitical tensions between the United States and Iran.

In its research, CIMB Securities Sdn Bhd noted that SD Guthrie is facing higher diesel costs, particularly in Papua New Guinea operations, as well as potential shipment delays to the Middle East. However, the company’s exposure to the region is considered relatively limited.

“Management stated that fertilizer costs for 2026 have been locked in, and discussions with suppliers are ongoing to ensure timely delivery,” CIMB Securities wrote in its report, as quoted by New Straits Times.

Fertilizers account for approximately 27–28% of total direct costs, while diesel contributes less than 5%. Nonetheless, operations in Indonesia and Papua could be affected if diesel supply disruptions persist.

Despite these challenges, the outlook for CPO prices remains positive.

“Management believes that higher CPO prices will likely offset rising costs, as elevated energy prices may encourage major producing countries to expand biodiesel mandates, supporting palm oil demand,” management noted in the report.

The company has also secured forward sales contracts for 42% of its Malaysian CPO production at around RM4,400 per ton.

While prospects remain relatively stable, CIMB Securities maintained a “Hold” recommendation on SD Guthrie shares, reflecting caution amid global energy volatility and operational risks. (T2)

Source: New Straits Times, CIMB Securities.