KUALA LUMPUR: Moody’s Ratings has raised its medium-term price sensitivity range for crude palm oil (CPO) to RM3,800-RM4,200 per tonne from RM3,400-RM3,800 previously, citing stronger demand in Indonesia driven by biodiesel mandates and modest production growth in Asia.
The rating agency said prices are likely to remain supported over the next 12 months.
Based on the updated assumptions, earnings for rated producers such as Sime Darby Plantation Bhd and IOI Corporation Bhd
will remain strong over the next 12 to 18 months, it said.
"We expect global demand to strengthen toward the end of 2025 as buyers restock ahead of the EU Deforestation Regulation (EUDR) deadline on Dec 30, 2025,” Moody’s said in a statement.
It noted that Sime Darby Plantation delivered its first fully EUDR-compliant shipment to Europe in September 2024, well ahead of the regulation’s implementation. IOI has also taken steps to ensure compliance, including the launch of a data room platform last month to support stakeholders’ due diligence.
Moody’s said CPO prices fell to RM3,780 per tonne in May 2025 from around RM5,000 at the end of 2024, due to higher production, softer demand and volatility linked to US trade policy. Prices have since rebounded to above RM4,400 as of Aug 22, 2025.
Production in Indonesia and Malaysia, which together account for more than 80 per cent of global output, is expected to increase modestly in 2025-2026. In Malaysia, improved labour availability will aid production, despite an ageing tree profile and slower-than-expected replanting.
"The Malaysian Palm Oil Board, the government agency responsible for promoting and developing the sector, forecasts production will edge up to 19.5 million tonnes in 2025 from 19.3 million tonnes in 2024,” Moody’s said. - Bernama
