Malaysia: Palm oil stocks likely to stay elevated

The plantation sector is expected to face short-term headwinds from rising stockpiles and softer price competitiveness against rival edible oils.

However, analysts point to supportive structural drivers and policy tailwinds into 2026.

According to Hong Leong Investment Bank (HLIB) Research, the uptrend in palm oil stock level will likely continue into September 2025, as seasonally higher restocking activities (ahead of Deepavali) will likely be weighed down by the seasonally higher cropping trend and crude palm oil’s (CPO) weakened price competitiveness against soybean oil.

The research house noted that year-to-date (y-t-d) CPO prices averaged at RM4,344 per tonne, with assumptions of RM4,200 per tonne in 2025 and RM4,050 per tonne in 2026.

HLIB Research said: “We believe CPO prices will remain subdued in the third quarter of financial year 2025, before turning more upbeat towards end-2025.”

It maintained its “neutral” stance, naming Kuala Lumpur Kepong Bhd (KLK) and SD Guthrie Bhd as top picks.

Maybank Investment Bank Research (Maybank IB) pointed out that as palm oil output is likely to stay elevated the next one to two months, CPO price will remain under short-term price pressure.

“We believe this will ensure price stays competitive to help stimulate demand as present exports estimates for first 10 days of September remain uninspiring,” said Maybank IB.

The research house reiterated its “neutral” call, highlighting SD Guthrie and Sarawak Oil Palms Bhd as its preferred “buys”. BIMB Research struck a more bullish tone, stating that “the current stable higher CPO price has exceeded our expectations with y-t-d average price climbing to RM4,312 per tonne (plus 7.8% year-on-year).”

It raised its forecast to RM4,300 per tonne in 2025 and RM4,200 per tonne in 2026, supported by policy-driven demand and the European Union’s acknowledgement of Malaysian Sustainable Palm Oil certification.

“We upgrade plantation sector to ‘overweight’ with higher average CPO price forecast of RM4,300 per tonne in 2025.”

Its top “buys” are Hap Seng Plantations Bhd [Target price (TP): RM2.40] and Sarawak Oil Palms (TP: RM3.75).

TA Research, however, flagged external headwinds from soybean markets.

It said, over the past month, the soybean price was volatile, reaching a high of about US$1,040 per bushel in late August before it trended downward.

“This lack of buying from China adds to worries about US exports and is contributing to a more bearish market outlook,” the research house said.

Additionally, with soybean oil’s discount narrowing to below US$100 per tonne versus palm oil, TA Research cautioned that price-sensitive buyers may switch to alternatives. It kept its “neutral” stance, projecting an average CPO price of RM4,200 per tonne in 2025.

Stock calls include “buy” on TSH Resources Bhd “hold” on SD Guthrie, KLK, United Malacca Bhd and Kim Loong Resources Bhd, and “sell” on IOI Corp Bhd.

CIMB Research projected Malaysian palm oil stocks to rise further.

“We project Malaysian palm oil stocks to rise 6% month-on-month (m-o-m) to 2.3 million tonnes in September 2025, driven by a projected 5% m-o-m decline in exports and 4% m-o-m decline in domestic disappearance,” the research house said.

It noted CPO’s premium over competing oils, but said demand could benefit from Indonesia’s plan to raise its biodiesel blend mandate to B50 by 2026.

CIMB Research maintained its “overweight” rating and RM4,200 per tonne CPO price forecast, with SD Guthrie, IOI, Ta Ann Holdings and Hap Seng Plantations as key picks.

Malaysia’s palm oil stock level had risen for the sixth straight month in August 2025, up 4.2% m-o-m to 2.2 million tonnes – higher than the 2.17 million tonnes expected in a Bloomberg survey – as exports lagged expectations and production climbed to 1.86 million tonnes.

Tags: price, Crude palm oil, palm oil, output, stockpiles