Malaysia: Firm edible oil prices seen for 2025

The plantation sector is expected to see firm edible oil prices, including palm oil prices, this year.

Kenanga Research said that edible oil supply is set to trail long-term demand growth of between three and four per cent this year.

“The expectation for 2026 is for supply to improve slightly more than 2025 at around 2-3 per cent year-on-year (YoY) but still below the 3-4 per cent trend line demand increment. As such, edible oil prices, including palm oil prices, should stay relatively firm in view of flattish YoY inventory moving into 2026,” it said in a note.

It added that this also means there is little room for supply downside, be it due to poor weather, supply-chain disruption or shifts in buying patterns due to geopolitical or trade tensions.

The firm said that crude palm oil (CPO) prices are staying firmer than expected year-to-date.

Coupled with peak production, hence lower unit cost, margins in the third quarter are set to inch up on a quarterly basis, as palm kernel prices are still as elevated as in the second quarter.

“Partially mitigated by a stronger ringgit, fertiliser prices are still rising on a net basis, but this is likely to be felt more into 2026, as many planters have locked in fertiliser prices for the rest of 2025,” it said.

Meanwhile, the direct impact of US tariffs is limited, as palm oil-based fatty acids are exempted. The firm said that the lingering uncertainties and worries over slower economic activity are limiting order size and nearer-term deliveries.

Kenanga Research maintained its ‘Neutral’ call on the sector.

“Although sector earnings look set to ease YoY moving into 2026 on strong comparatives, overall sector earnings are set to stay robust,” said the firm.

Tags: prices, Crude palm oil, Production, palm oil, edible oil