Phillip Capital Research said it remained “neutral” on the plantation sector.
PETALING JAYA: Crude palm oil (CPO) prices are expected to remain volatile in 2026, but most analysts see a broadly supportive trading band anchored by structural biofuel demand, seasonal restocking and disciplined supply growth.
While near-term weakness persists amid high inventories, the medium-term outlook points to prices stabilising around RM4,000-RM4,200 per tonne, shaping a selective investment strategy across Malaysia’s plantation sector.
Sector sentiment has turned more cautious following softer prices at the end of 2025 and swelling stockpiles, yet research houses largely agree that downside risks are contained.
Phillip Capital Research said it remained “neutral” on the plantation sector, maintaining its 2026 CPO price assumption at RM4,200 per tonne to reflect more balanced supply-demand dynamics amid continued price volatility and regulatory overhangs.
“We expect CPO prices to hold support at RM3,800 to RM3,900 per tonne, with potential to rebound to RM4,500 per tonne in the first quarter of financial year 2026, supported by seasonally low crop cycle and firmer festive restocking demand from China and major Muslim markets,” the brokerage said.
Its top pick is SD Guthrie Bhd
, citing scalability, cost discipline and land value unlocking as longer-term catalysts.
TA Research also has a “neutral” stance for the plantation sector.
“Looking ahead to 2026, we expect CPO prices to moderate, averaging around RM4,000 per tonne,” it said, flagging both upside and downside risks, ranging from South American soybean supply to production costs, while recalibrating stock calls following recent share price movements, including a downgrade of SD Guthrie after its rally.
CIMB Research adopted a more data-driven stance, trimming its forecast amid inventory overhangs and policy uncertainty.
“We cut our 2026 average CPO price to RM4,000 per tonne from RM4,200 per tonne, reflecting high stocks and limited follow-through on biodiesel policies,” it said, adding that weaker crude oil prices and competition from other edible oils could keep CPO price-competitive.
However, it maintained an “overweight” sector call, highlighting land monetisation as a key theme and noting that lower feedstock costs benefit downstream players.
Hong Leong Investment Bank (HLIB) Research maintained its 2026 average CPO price assumption of RM4,200 per tonne, on the view that current weakness in CPO prices is temporary and poised for a recovery in the near term, asserting that Malaysian landbanks deserve a valuation premium amid rising regulatory risks in Indonesia.
The brokerage reiterated its “overweight” stance, naming SD Guthrie and Hap Seng Plantations Holdings Bhd as top picks due to earnings diversification, balance sheet strength and dividend visibility.
BIMB Research echoed optimism on the broader price range despite acknowledging recent softness.
“We forecast CPO price to trade within the RM3,700 to RM4,500 per tonne range, averaging RM4,200 per tonne in 2026, with upside risk skewed towards the potential full implementation of Indonesia’s B50 biodiesel mandate,” it said.
It highlighted festive-driven restocking, a tightening global vegetable oil balance and supportive United States biofuel policies as underlying pillars, while cautioning that funding uncertainties could delay a full B50 rollout.
Recent data underscore the mixed backdrop. According to the Malaysian Palm Oil Board, CPO production in December fell 5.5% month-on-month to 1.83 million tonnes, yet inventories surged to 3.05 million tonnes, breaching the three-million-tonne mark for the first time since February 2019.
