CPO Prices Expected Average At RM4200 But Trend Could Change In Q4
Major research houses have maintained their NEUTRAL calls on the plantation sector, citing rising stockpiles, subdued exports and a lack of near-term catalysts for crude palm oil (CPO) prices. Top picks across the board include IOI Corporation, SD Guthrie, Hap Seng Plantations and Sarawak Oil Palms, with a consensus that CPO prices will remain range-bound in the coming quarter.
Malaysian palm oil stocks rose 2.4% month-on-month to 2.03 million tonnes in June, marking the highest level since December 2023, as exports dropped 10.5% from the previous month while production fell 4.5% to 1.69 million tonnes. RHB Investment Bank Bhd highlighted that while output slowed in June after a strong May, it is expected to gradually pick up again towards a second mini-peak in the third quarter. However, weaker exports attributed to port congestion in India led to a rise in inventory, pushing the stock/usage ratio to 10.25%, above the 15-year average.
MIDF Amanah Investment Bank Bhd (MIDF Research) noted that June’s CPO prices remained flat, with an average of RM3,969 per tonne, despite a competitive price discount compared to soybean oil (SBO). Export volumes were flat due to high stock levels and soft demand, although fresh fruit bunch (FFB) yields improved slightly on the back of seasonally productive conditions. MIDF Research also revised its average CPO price forecast for 2025 downward by 4.6% to RM4,100 per tonne, maintaining its Neutral stance on the sector.
CIMB Investment Bank Bhd (CIMB Securities) echoed similar sentiments, stating that the looming 25% import tariffs on Malaysian palm oil products into the US, effective Aug 1, may encourage front-loading of shipments in July. However, given that the US accounts for only 2.4% of global palm oil consumption, the impact may be limited. CIMB Securities forecasts CPO prices will stay within the RM3,700 to RM4,100 range in July, while retaining IOI Corporation and Hap Seng Plantations as its top picks.
Hong Leong Investment Bank Bhd (HLIB) also observed that exports fell for the first time since February, down to 1.26 million tonnes, driven by reduced demand from key markets such as India, the EU and Asia Oceania. Despite a brief surge in early July exports, HLIB believes stock levels will likely remain above the 2-million-tonne mark this month. It maintained its average CPO price assumption at RM4,200 per tonne for 2025, and sees a more optimistic price trend in the fourth quarter of the year.
Looking ahead, while some restocking from countries like India may offer short-term support, analysts agree that rising production and high stock levels will continue to weigh on the sector. As such, most research houses see limited upside for plantation counters in the near term, reinforcing their neutral view on the industry’s prospects for the second half of 2025.
