11/11/2025 (Business Today) - Various research houses have weighed in on the Malaysian palm oil sector following October’s record-high production levels and surging stockpiles.

RHB Investment Bank Bhd (RHB Research) maintained a Neutral rating on plantation stocks, citing a 6.5-year high in palm oil inventory at 2.46 million tonnes, driven by stronger output and higher crude palm oil (CPO) prices.

MBSB Investment Bank Bhd (MBSB Research) also maintained a Neutral view, noting CPO prices softened amid abundant stocks despite the strongest production levels since August 2015, while CIMB Investment Bank Bhd (CIMB Securities) kept an Overweight stance, highlighting that Malaysia’s palm oil output likely peaked in October and would trend lower from November to February 2026.

Hong Leong Investment Bank Bhd (HLIB) maintained its Overweight rating, viewing the October spike in stock levels and production as temporary and anticipating supply to tighten in the coming months.

October production in Malaysia reached 2.04 million tonnes, up 11% month-on-month and 14% year-on-year, the highest since August 2015, supported by higher fresh fruit bunch (FFB) yields and improved field productivity across key states including Sarawak, Pahang and Johor.

Palm oil stockpiles rose 4% month-on-month and 31% year-on-year to 2.46 million tonnes, slightly above Reuters’ survey forecasts, due to stronger output despite higher exports. Exports rebounded 18.6% month-on-month to 1.69 million tonnes, led by shipments to Africa, China and the European Union, while imports fell 54% to 36,000 tonnes.

CPO prices softened during October, ending the month at RM4,215 per tonne, a 3.1% decline from early-month highs of RM4,346 per tonne, amid eased supply concerns. MBSB Research expects prices to average RM4,220 per tonne in October, while RHB Research retained its CPO price assumptions of RM4,350 per tonne for 2025 and RM4,250 per tonne for 2026.

HLIB and CIMB Securities both projected prices of RM4,300 per tonne for 2025 and RM4,200 per tonne for 2026. Analysts noted that the current price softness was likely temporary as Malaysian production is expected to moderate post-peak, while demand may benefit from improved competitiveness against soybean, rapeseed and sunflower oils.

Key listed players remain in focus, with RHB Research highlighting Johor Plantations Group, Sarawak Oil Palms, IOI Corporation, London Sumatra Indonesia, SD Guthrie and First Resources as top picks.

MBSB Research cited SD Guthrie for its strong earnings from a new industrial segment, while CIMB Securities highlighted IOI Corp for its limited regulatory exposure in Indonesia and SD Guthrie for potential gains from ongoing land monetisation. HLIB favoured SD Guthrie and Hap Seng Plantations for upstream exposure, dividend yield and balance sheet strength.

Analysts broadly expect Malaysian plantation companies to report largely in-line third-quarter earnings, with some variability among producers due to moderating output or downstream margin pressures, particularly for Indonesian-linked operations.

The sector outlook remains cautiously constructive, underpinned by expected tighter supply, stable yields and potential support from policy developments such as Indonesia’s upcoming B50 biodiesel mandate.

Various research houses have weighed in on the Malaysian palm oil sector following October’s record-high production levels and surging stockpiles.

RHB Investment Bank Bhd (RHB Research) maintained a Neutral rating on plantation stocks, citing a 6.5-year high in palm oil inventory at 2.46 million tonnes, driven by stronger output and higher crude palm oil (CPO) prices.

MBSB Investment Bank Bhd (MBSB Research) also maintained a Neutral view, noting CPO prices softened amid abundant stocks despite the strongest production levels since August 2015, while CIMB Investment Bank Bhd (CIMB Securities) kept an Overweight stance, highlighting that Malaysia’s palm oil output likely peaked in October and would trend lower from November to February 2026.

Hong Leong Investment Bank Bhd (HLIB) maintained its Overweight rating, viewing the October spike in stock levels and production as temporary and anticipating supply to tighten in the coming months.

October production in Malaysia reached 2.04 million tonnes, up 11% month-on-month and 14% year-on-year, the highest since August 2015, supported by higher fresh fruit bunch (FFB) yields and improved field productivity across key states including Sarawak, Pahang and Johor.

Palm oil stockpiles rose 4% month-on-month and 31% year-on-year to 2.46 million tonnes, slightly above Reuters’ survey forecasts, due to stronger output despite higher exports. Exports rebounded 18.6% month-on-month to 1.69 million tonnes, led by shipments to Africa, China and the European Union, while imports fell 54% to 36,000 tonnes.

CPO prices softened during October, ending the month at RM4,215 per tonne, a 3.1% decline from early-month highs of RM4,346 per tonne, amid eased supply concerns. MBSB Research expects prices to average RM4,220 per tonne in October, while RHB Research retained its CPO price assumptions of RM4,350 per tonne for 2025 and RM4,250 per tonne for 2026.

HLIB and CIMB Securities both projected prices of RM4,300 per tonne for 2025 and RM4,200 per tonne for 2026. Analysts noted that the current price softness was likely temporary as Malaysian production is expected to moderate post-peak, while demand may benefit from improved competitiveness against soybean, rapeseed and sunflower oils.

Key listed players remain in focus, with RHB Research highlighting Johor Plantations Group, Sarawak Oil Palms, IOI Corporation, London Sumatra Indonesia, SD Guthrie and First Resources as top picks.

MBSB Research cited SD Guthrie for its strong earnings from a new industrial segment, while CIMB Securities highlighted IOI Corp for its limited regulatory exposure in Indonesia and SD Guthrie for potential gains from ongoing land monetisation. HLIB favoured SD Guthrie and Hap Seng Plantations for upstream exposure, dividend yield and balance sheet strength.

Analysts broadly expect Malaysian plantation companies to report largely in-line third-quarter earnings, with some variability among producers due to moderating output or downstream margin pressures, particularly for Indonesian-linked operations.

The sector outlook remains cautiously constructive, underpinned by expected tighter supply, stable yields and potential support from policy developments such as Indonesia’s upcoming B50 biodiesel mandate.

https://www.businesstoday.com.my/2025/11/11/assessing-malaysias-palm-oil-sector/