MBSB Research expects CPO prices to average around RM4,200 per tonne this year.
PETALING JAYA: Malaysia’s plantation sector is expected to face a more challenging operating environment this year, with crude palm oil (CPO) prices likely to remain range-bound amid elevated stock levels and subdued export demand, despite relatively stable production prospects.
Based on updates from the Malaysia Palm Oil Board (MPOB) at the Palm Oil Conference and Seminar (R&O 2026), MBSB Research expects CPO prices to average around RM4,200 per tonne this year, with prices likely trading between RM4,000 and RM4,500 per tonne as the year progresses
MPOB highlighted that high opening stocks and only modest supply growth will put pressure on CPO prices in the first half of the year (1H26), even as biodiesel mandates in Indonesia provide some downstream support.
The board is also anticipating Malaysia’s palm oil production to soften this year, projecting output of 19.5 million to 19.8 million tonnes, down from a record 20.3 million tonnes last year, as estates enter a biological tree-rest phase following last year’s yield rebound.
On the other hand, MBSB Research is forecasting marginal production growth of 1%, reflecting natural yield limitations after two years of recovery.
Meanwhile, the research house is also projecting exports to remain soft, with shipments expected to hover around 15.8 million to 16 million tonnes, as demand from key markets such as India, China and the European Union remains subdued.
It said palm oil exports fell 9.7% year-on-year (y-o-y) last year to 15.3 million tonnes, largely due to a narrower discount against competing vegetable oils and weaker imports from major buyers.
This contributed to ending stocks surging to 3.05 million tonnes, the highest level since February 2019.
Commenting on last year as a whole, MBSB Research said: “Compared with 2024, planted area increased by 1.6% y-o-y to 5.7 million hectares, supported by higher replanting activity, mainly undertaken by private estates and government agencies. This expansion was broad-based.”
It added that fresh fruit bunch yields also improved 6.4% to 17.77 tonnes per hectare, reflecting a higher proportion of mature trees and improved labour availability.
MPOB observed that yields have reverted to pre-pandemic levels, last seen in 2019, while oil extraction rates benefited from stronger harvesting productivity
Beyond supply-demand dynamics, regulatory developments are also expected to reshape the industry.
MPOB said the Sawit Intelligent Management System will be integrated into the National Traceability System this year, linking plantation mapping, sustainability certification and transactional data.
The integration aims to “provide end-to-end data visibility” and ensure compliance with global requirements, including the EU Deforestation Regulation, a key consideration for exporters targeting European markets.
Given the outlook, MBSB Research has kept a “neutral” stance on the plantation sector, citing limited upside from current price levels and a disconnect between plantation share prices and CPO fundamentals.
It named SD Guthrie Bhd
as its top pick due to balance sheet strength and lower earnings volatility, even as the broader sector navigates a softer price environment this year.
