Palm oil prices could remain stable amid rising El Niño risks

In a note, RHB IB analyst Ho Lee Leng notes that crude palm oil prices are expected to remain at current levels despite geopolitical risks, with further gains possible if the developing El Niño phenomenon intensifies. The US National Oceanic and Atmospheric Administration has issued an El Niño warning and forecasts a high probability of a strong event by the end of 2026, she notes. Historically, a strong El Niño has reduced palm oil yields and increased crude palm oil prices. Further support could come from tightening export regulations in Indonesia, which could limit supply and increase compliance costs for exporters, she adds. RHB upgrades its Southeast Asian plantation sector rating from neutral to outperform, naming Johor Plantations, Sarawak Oil Palms, IOI Corp., Hap Seng Plantations, London Sumatra Indonesia, and SD Guthrie as its top picks.

Malaysia lowered its July reference price for crude palm oil to a level that maintains the export duty at 10%, according to a circular published Monday on the Malaysian Palm Oil Council’s website.

The world’s second-largest palm oil exporter set the July reference price at 4,346.79 ringgit (US$1,074.61) per metric tonne. The June reference price was 4,372.64 ringgit per tonne, subject to a 10% duty.

The export tax structure starts at 3% for crude palm oil in the price range of 2,250 to 2,400 ringgit per tonne. The maximum tax rate is set at 10% for prices above 4,050 ringgit per tonne.

Tags: prices, palm oil