InfoSAWIT, KUALA LUMPUR – Several investment banks project crude palm oil (CPO) prices to remain elevated in 2026, supported by rising biodiesel demand and the potential emergence of a strong El Niño phenomenon that could disrupt regional palm oil production.
In its latest research note, Kenanga Investment Bank Bhd projected CPO prices to range between RM4,250 and RM4,350 per ton throughout 2026. Plantation companies are also expected to face rising fertilizer and energy costs beginning in the second half of 2026.
Despite these challenges, the plantation sector is still viewed as a beneficiary of geopolitical tensions in West Asia, which have driven up global vegetable oil and energy prices.
CPO prices climbed from RM4,019 per ton in January to RM4,568 per ton in April 2026, supported by steady demand growth of around 3–4% and rising biodiesel consumption.
According to Bernama, as published online by InfoSAWIT on Thursday (May 14, 2026), Kenanga IB said the possibility of CPO prices remaining firm through the first half of 2026 and extending into fiscal year 2027 is increasing alongside growing risks of a very strong El Niño event.
“Historically, El Niño has not had a major impact on oil palm productivity, even under strong conditions. However, a very strong El Niño could disrupt the flowering phase and affect fresh fruit bunch (FFB) production in the following season,” the research note stated.
The research house also noted that Indonesia has historically shown greater resilience to severe El Niño impacts compared to Malaysia, likely due to its younger plantation profile and wider plantation distribution.
According to Kenanga IB’s assessment, a very strong El Niño could reduce regional palm oil production by between 2% and 9% in the following year, potentially lifting CPO prices by an additional 5% to 10%.
Based on this outlook, Kenanga IB maintained its “overweight” recommendation for the plantation sector, assuming CPO prices of RM4,250 per ton in 2026 and RM4,200 per ton in 2027.
Meanwhile, Hong Leong Investment Bank Bhd also maintained its 2026 CPO price forecast at RM4,350 per ton. For the longer term beginning in 2027, the bank continues to project CPO prices at around RM4,200 per ton.
“We maintain an overweight view on the sector, supported by stronger near-term CPO prices driven by elevated global crude oil prices,” the bank said in its research report.
However, Hong Leong IB cautioned that the current price upcycle may only persist during the early phase, while medium-term risks could emerge from adjustments in competing vegetable oil supplies in the global market. (T2)
