Malaysia: Plantation stocks seen facing pressure in 2026 on softer output
Malaysia’s plantation sector may face softer market conditions next year as crude palm oil output begins to ease from its 2025 peak.
According to RHB Research, the moderation in production could create mixed prospects for listed planters.
It said lower output usually supports crude palm oil, or CPO, prices but current high inventories are likely to limit any upside.
“As of October 2025, crude palm oil (CPO) output hit a 6.5-year high at 2.46 million tonnes. However, after recording an 11% month-on-month increase in October, output is expected to decline from November to December,” it said in a statement.
RHB Research expects global demand to cool after major festive seasons conclude.
It said most plantation companies are likely to post third-quarter 2025 results that match forecasts due to steady output and firm pricing.
“Average CPO prices in Malaysia rose 5% quarter-on-quarter to RM4,280 per tonne, while palm kernel prices increased 2% to RM3,460 per tonne,” it said.
Fresh fruit bunch output among Malaysia-based companies under RHB’s coverage increased 12.5% quarter-on-quarter.
Indonesian producers saw flat output with gains mainly driven by a 5% rise in CPO prices.
The firm expects plantation earnings to improve year-on-year in 2025, projecting a 7% increase for CPO and 31% for palm kernel.
It referred to Indonesian Palm Oil Association data showing a 13% rise in output from January to August.
“Some companies may miss estimates due to moderate production trends,” RHB Research said.
Five companies are expected to meet forecasts while four may fall short.
RHB Research maintained its neutral view on plantation stocks and kept its CPO price targets at RM4,350 per tonne for 2025 and RM4,250 for 2026.
Its preferred counters include Johor Plantations Group, Sarawak Oil Palms, IOI Corporation, SD Guthrie, London Sumatra Indonesia and First Resources.
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