Accra:Crude palm oil (CPO) prices are anticipated to face pressure due to high stockpiles and seasonal production, with El Niño potentially boosting prices in 2027, as reported by various research institutions.
According to BERNAMA News Agency, Hong Leong Investment Bank (HLIB) forecasts that elevated inventory levels will persist into October 2026, coinciding with a seasonal production peak that could suppress CPO prices. However, HLIB expects inventories to decrease as seasonal production slows and the delayed effects of El Niño influence output. Their average CPO price forecasts remain at RM4,450 per tonne for 2026 and RM4,500 per tonne for 2027, with an "Overweight" stance on the plantation sector.
MBSB Investment Bank Bhd predicts that CPO prices will remain soft in October 2026, averaging around RM4,518 per tonne, a decline of 2.1% month-on-month. Although the probability of a strong El Niño has increased to 90%, which may cause supply disruptions, MBSB notes that high stockpiles are likely to keep prices stable. They also highlight that near-term risks are mostly driven by demand, with stockpiles potentially reaching four million tonnes if production continues to grow.
CIMB Securities Sdn Bhd projects that CPO prices will trade between RM4,400 and RM4,600 per tonne in the near term, but high inventories could limit gains. They observe that higher energy prices have improved biodiesel economics, while prolonged dry conditions and haze in Indonesia and Malaysia might affect palm oil output from 2027. CIMB maintains its 2026 and 2027 CPO price forecasts at RM4,450 and RM4,550 per tonne, respectively, and reiterates its "Overweight" rating on the plantation sector.
Apex Securities Bhd estimates that cumulative CPO production through September reached 71% of its full-year 2026 forecast of 20.7 million tonnes. They maintain this production forecast but warn that El Niño's lagged effects could impact production in the first half of 2027. Apex forecasts average CPO prices at RM4,500 per tonne for 2026, RM4,800 per tonne in the first half of 2027, and RM4,600 in the second half of 2027. Additionally, the 17.6% minimum wage increase to RM2,000 effective June 2027, included in Budget 2027, could significantly affect the plantation sector's earnings, potentially reducing net profit by two to ten percent.