Positive Outlook For Palm Oil Sector As CPO Prices Expected To Stabilise At RM4,815
15/01/2025 (Business Today) - MIDF Amanah Investment Bank (MIDF Research) has maintained its tactical POSITIVE outlook on the Malaysian palm oil sector for 2025, with a target price of RM4,300 per metric tonne for crude palm oil (CPO). This follows the recent Malaysia Palm Oil Conference & Seminar 2025, where the research house discussed the industry’s performance and challenges, including stagnant growth in oil palm output and the implementation of the Sawit Intelligent Management System (SIMS).
The report by MIDF Research highlighted that Malaysia’s oil palm production is expected to see only marginal growth in 2025, with output projected to rise by 4.2% to 19.34 million metric tonnes. However, palm oil exports are expected to continue their upward trend, growing by 11.7% year-on-year.
This increase in exports comes despite a decline in planted area, which decreased by 0.7% to 5.61 million hectares. The reduction in area is attributed to land use changes and replanting activities, particularly in Sabah and the Peninsular region.
MIDF Research emphasised that while production growth remains subdued, palm oil continues to dominate the global vegetable oils market, accounting for around 30% of total production, far ahead of competitors like soybean oil and rapeseed oil. The export revenue from palm oil in 2024 is expected to reach RM109.33 billion, up 15.1% from the previous year. The research house noted that the improved local production has somewhat mitigated the impact of lower imports, particularly due to Indonesia’s tax structure.
Looking ahead, the analyst expects CPO prices to stabilise at RM4,815 per metric tonne in January 2025, a slight decline of 6% month-on-month. However, MIDF Research anticipates that prices could increase to nearly RM5,000 per metric tonne in the second quarter of 2025, driven by slower production growth in Malaysia and Indonesia, as well as potential disruptions caused by the La Niña weather event.