InfoSAWIT, KUALA LUMPUR – Global crude palm oil (CPO) prices are expected to remain elevated through 2027, supported by Indonesia’s expanding biodiesel requirements and potential production disruptions caused by El Niño.
Hong Leong Investment Bank (HLIB) maintained its average Malaysian CPO price forecasts at RM4,450 per tonne for 2026 and RM4,500 per tonne for 2027, citing expectations of a tighter supply-demand balance.
The research firm also retained its Overweight recommendation on the plantation sector, favouring companies with greater exposure to Malaysia. HLIB expects seasonal production gains and stronger palm oil product prices to support financial performance across the sector.
According to InfoSAWIT, citing New Straits Times on Thursday, October 29, HLIB anticipates that plantation companies under its coverage will report higher earnings for the third quarter of 2026.
Fresh fruit bunch (FFB) production among the companies analysed increased by between 6% and 35.6% quarter-on-quarter during the July–September period.
Malaysia-focused plantation companies, including Hap Seng Plantations Holdings Bhd, IOI Corp Bhd and Jaya Tiasa Holdings Bhd, recorded stronger quarterly production growth than several peers operating in Indonesia.
HLIB attributed much of the increase to improved harvests following earlier replanting programmes. Jaya Tiasa was an exception, as accelerated replanting reduced its harvestable area, while prolonged soil moisture stress affected productivity.
Higher FFB output and stronger palm oil product prices are expected to support upstream earnings growth, although rising fertiliser costs could erode some gains.
Downstream profitability is also projected to improve, supported by a narrower CPO export tax differential compared with the second quarter and relatively stable palm kernel prices.
Proactive restocking is expected to provide additional demand support amid geopolitical uncertainty and preparations for the European Union Deforestation Regulation (EUDR).
Plantation companies are scheduled to begin releasing their financial results from November 5, 2026. (T2)
