PETALING JAYA: CIMB Research expects crude palm oil (CPO) prices to hold steady, supported by Indonesia’s biodiesel policy and limited production growth.
The research house shared that Wilmar International Ltd has guided for a favourable plantation outlook in the second half of financial year 2025 (2H25), underpinned by firm CPO prices, steady fresh fruit bunches (FFB) growth, and stable crushing margins.
However, CIMB Research said during Wilmar’s second quarter of financial year 2025 results briefing, the planter pointed out that refining margins in Malaysia and Indonesia are expected to remain challenging.
“Wilmar maintained that the plantation business should remain favourable in 2H25, underpinned by steady CPO prices, FFB output growth (5%), and limited impact from dry weather (no fires reported at its estates),” it added.
The research house said refining margins remain challenging, particularly in Malaysia and Indonesia, with profits expected to be modest and dependent on raw material availability, demand trends, and market timing.
The research house believed the 19% US import tariff on Malaysian and Indonesian palm oil is expected to have minimal direct impact.
This is because the United States accounts for 2% to 3% of Wilmar’s palm oil export volumes, and volumes can be diverted to India, Africa, or other markets.
It said production growth in Indonesia for 2025 is now expected at about 5% year-on-year, slightly below earlier expectations.
CIMB Research believed regulatory risks in Indonesia remain, including a pending Supreme Court decision on the CPO export permit case, an ongoing rice quality investigation, and unresolved forestry land compliance issues.
“The group expects minimal impact from the higher US import tariff on Malaysia and Indonesia and believes Indonesia’s B50 biodiesel mandate is achievable,” it added.
Furthermore, the research house said Wilmar expects Indonesia’s B50 biodiesel mandate to be implementable if the government proceeds with the policy mandate.
Meanwhile, consumer sentiment in China has improved in recent months, although recovery is expected to be gradual; downtrading persists in some categories.
“Expansion of the central kitchen business in China continues, albeit at a slower pace to refine the model and improve efficiency,” it noted.
