PETALING JAYA: Analysts generally peg crude palm oil (CPO) to trade steadily between the RM4,000 and RM4,400 per tonne range for the second half of financial year 2026 (2H26), despite the current headwinds.
According to MBSB Research, the CPO price volatility will largely hinge on the magnitude and duration of the US-Iran conflict, which could influence the palm oil-gas oil spread and energy-linked support for palm oil.
“Other equally significant factors include the emerging El Nino weather phenomenon that could develop into a strong or very strong event, and the ringgit direction, where any further appreciation could erode palm oil price competitiveness against rival edible oils,” it said in its latest 2H26 market update report.
MBSB Research also expects palm oil restocking activities to remain robust in coming months as major importing countries continue rebuilding inventories ahead of the anticipated supply tightening from the onset of a very strong El Nino in 2H26.
“Demand is also expected to receive seasonal support from festive-related consumption, particularly the Mooncake Festival in September, Deepavali in November and Christmas-year-end celebrations,” it noted.
It added that offshore refiners are likely to secure feedstock requirements earlier to protect their margins, which should underpin export demand and facilitate a gradual drawdown in global edible oil inventories.
That said, cost pressures are expected to build in 2H26 particularly for upstream planters, following the recent spike in urea prices and higher diesel-linked logistics expenses.
Downstream players may also face margin compression from elevated freight and insurance costs.
MBSB Research, which expects a roller-coaster ride for the plantation sector in 2H26, still maintained a tactical positive stance on the sector.
Meanwhile, Maybank Investment Bank Research (Maybank IB) in its 2H26 sector outlook report said the El Nino and Indonesia’s B50 biodiesel mandate implementation will be key driving factors as “they may tighten global palm oil export supplies”.
Historically, 2H earnings are stronger compared to 1H on better output and lower cost (as more manuring costs are expensed in 1H compared to 2H).
It noted: “This year, besides stronger anticipated output, the 2H26 CPO average selling prices (ASPs) may be sustained or lifted by weather developments as forecasters have confirmed an El Nino phenomenon. Some even predict the potential of a severe El Nino towards year-end.
“Severe El Nino typically results in lower crop yields (such as in 2027 to 2028 with a lagged impact) but typically compensated by better CPO ASPs,” Maybank IB said.
It has made no changes to its RM4,400 per tonne CPO ASP forecasts for 2026 and 2027. Within the sector, SD Guthrie Bhd
is the research house’s top “buy”.
It said SD Guthrie’s new business verticals in industrial land developments (via joint ventures with credible partners), and in large-scale solar/renewable energy development on its existing strategic land banks are expected to generate RM500mil to RM700mil of sustainability income per annum.
It also said Sarawak Oil Palms Bhd (SOP) is an undervalued play, with the planter’s net cash position at about RM1.4bil.
“We expect SOP to sharply raise its dividend payouts to reward shareholders in the coming years.” it added.
Maybank IB also likes Genting Plantations Bhd as a net beneficiary of the Johor Singapore-Special Economic Zone development and a plantation laggard trading at mid-teens FY26 price-to-earnings ratio with attractive dividend yields of over 5%.
