13/01/2026 (The Edge Malaysia) - DEC 2025 plantation production dipped 5% quarter-on-quarter (QoQ) to 1.83 mil MT but stayed at the top-end of the 10-year range, hence standing 23% higher year-on-year (YoY). Meanwhile, exports managed to improve 9% QoQ to 1.317 mil MT but still 2% down YoY.

Dec 2025 CPO price slipped to RM4,043 per MT resulting in full-year calendar year 2025 (CY25) crude palm oil (CPO) price of RM4,308 per MT (+2% YoY). 

“Hence, we are keeping our CPO prices at RM4,300 and RM4,000 respectively for CY25 and CY26,” said Kenanga.

Kenanga remains wary of current divergence between the KL Plantation Index and CPO prices. 

During quarter four calendar year 2025 (4QCY25), KL Plantation Index rose 7% from end-Sept to the close of Dec while CPO prices fell 8%. Nonetheless, on average basis, CPO prices are more stable QoQ. 

However, with coming festivities such as Chinese New Year (Feb 2026) and Hari Raya Aidilfitri (Mar 2026), CPO prices should still be able to hover around RM4,000 per MT.

European rapeseed and sunflower harvests are expected to recover from a poor CY25 while Latin American soyabean planting is likely to expand further.

Consequently, CY26 edible oil supply should improve 2%-3%, sufficient to meet a moderate demand growth scenario.

However, higher bio-diesel blending for palm oil in Indonesia and/or soyabean oil in the US may push CY26 demand to outstrip supply. 

“If so, CPO prices may trade above our assumption of RM4,000 per MT and if sustained at RM4,300 or higher, we will revisit our forecasts,” said Kenanga.

Upstream margin may slip a little on rising wages in Indonesia but staying manageable from still good PK price while fertiliser prices (especially nitrogen-based ones) have recently shown weakness again along with fuel costs. 

Nonetheless, after a good CY25, flattish to softer CY26-27 upstream earnings are expected, but still staying robust.

Downstream improved more than expected in 3QCY25. Whilst the QoQ uptick in revenue was expected as 3Q is often the best quarter for demand and revenue, margins were surprisingly strong in 3Q. However, regional refining overcapacity remains. 

Oleochemical demand is also expected to stay muted in view of slow global growth ahead. Kenanga’s NEUTRAL call on the sector is unchanged. —Jan 13, 2025

https://focusmalaysia.my/palm-oil-prices-steady-even-as-production-slips-in-dec-2025/