CIMB cuts 2026 CPO price forecast as palm oil stocks hit seven-year high
13/01/2026 (The Edge Malaysia), Kuala Lumpur - Malaysian palm oil faces a cautious start to 2026 as record inventories and limited follow-through on biodiesel policies weigh on prices. The rise in stock levels exceeded both market and consensus expectations, prompting CIMB to cut its average crude palm oil (CPO) price forecast.
Malaysian palm oil stocks rose 7.6% month-on-month and 78.5% year-on-year to 3.05 million tonnes in December 2025. The surge was driven by stronger than expected production, while exports and domestic usage lagged.
As a result, near-term upside for crude palm oil (CPO) prices is limited, leading CIMB to lower its 2026 average CPO price forecast to RM4,000 per tonne from RM4,200 per tonne. Its forecast is on a par with Kenanga Research’s RM4,000/tonne and below the RM4,250/tonne assumption by RHB and RM4,200/tonne forecast by Hong Leong Investment Bank (HLIB).
The sharp build up in inventories marked a seven-year high and reflected production outpacing demand, with December output reaching 1.83 million tonnes, the highest December level since 2017.
While production eased 5.5% month-on-month, it still surged 23.1% year-on-year, driven by stronger fresh fruit bunch (FFB) yields across key producing states, particularly Kelantan, Pahang and Sabah.
“Stock levels should start moderating in the months to come, but it will take some time to digest such high levels, as stock levels at major importing countries are currently high and in no dire need of replenishment,” RHB added in its notes.
Policy wise, it said any recovery in crude palm oil prices could be constrained by policy uncertainties and external market conditions.
CIMB noted limited follow-through on Indonesia’s biodiesel mandate, with uncertainty surrounding the US’ biofuel policy review and a softer crude oil price outlook dampening demand for palm-based biofuels.
In addition, RHB highlighted that palm oil stockpiles in China and India remain well above historical averages, reducing the urgency for replenishment despite competitive pricing. This suggests that inventory normalisation in Malaysia could take longer than anticipated.