Malaysia: CPO price premium weighs on exports

Malaysia’s palm oil exports could remain under pressure as crude palm oil (CPO) prices trade at a premium to rival edible oils, according to CIMB Securities Sdn Bhd.

The firm said CPO is currently priced US$72 per tonne higher than soybean oil, US$92 above rapeseed oil and US$40 above sunflower oil, eroding its competitiveness in key markets such as the European Union and India.

Malaysian palm oil exports slipped 1.24 per cent month-on-month (MoM) to 476,610 tonnes in the first 10 days of September, mainly due to weaker shipments to these two destinations.

In August, Malaysian palm oil stocks rose 4.2 per cent MoM and 17 per cent year-on-year (YoY) to 2.2 million tonnes, reaching a 20-month high.

CIMB Securities said the stock levels were in line with its estimate and consensus expectations.

Palm oil production increased 2.3 per cent MoM to 1.86 million tonnes while exports dipped 0.3 per cent to 1.33 million tonnes.

A notable driver keeping stocks in check was strong domestic disappearance, which rose 6.2 per cent to 491,000 tonnes, up 29 per cent to-date to 3.1 million tonnes.

This is partially supported by higher biodiesel output, oleochemical demand and used cooking oil exports.

“We project Malaysian palm oil stocks to rise 6.0 per cent MoM to 2.3 million tonnes in September, driven by a projected 5.0 decline in exports and 4.0 per cent decline in domestic disappearance.

“Palm oil production is expected to fall 2.0 per cent MoM, reflecting fewer working days in September following four public holidays compared to one in Auguest,” it said in a note.

CIMB Securities maintained its “Overweight” stance on the plantation sector, citing supportive long-term demand drivers such as Indonesia’s planned upgrade of its biodiesel mandate to B50 by 2026 and US biofuel policies.

Its average CPO price estimate stands at RM4,200 per tonne for 2025, versus RM4,312 per tonne achieved in the first eight months of this year.

Top sector picks include SD Guthrie Bhd (Buy, TP: RM5.15), IOI Corp Bhd (Buy, TP: RM3.93), Ta Ann Holdings Bhd (Hold, TP: RM4.16) and Hap Seng Plantations Holdings Bhd (Buy, TP: RM1.97).

Tags: palm oil, shipments, rapeseed oil, sunflower oil, exports, soybean oil, prices, Crude palm oil, Malaysia