MBSB Sees Modest Palm Oil Production Growth Of 1% In 2026
15/01/2026 (Business Today) - RHB Investment Bank Bhd (RHB Research) and MBSB Investment Bank Bhd (MBSB Research) have maintained their NEUTRAL call on the plantation sector, with top picks including Johor Plantations Group, Sarawak Oil Palms, IOI Corp, London Sumatra Indonesia, SD Guthrie and First Resources.
The research houses cite stable Malaysian production, high ending stockpiles and new policy adjustments in Indonesia.
The analysts highlighted that Indonesia will raise the crude palm oil (CPO) export levy to 12.5% from March, while the levy on refined products increases to 10% to fund the maintained B40 biodiesel mandate, reversing the planned B50 rollout due to technical hurdles.
MBSB Research expects Malaysian CPO prices to average RM4,200 per tonne in 2026, while RHB is reviewing its 2026 price assumption of RM4,250 per tonne following the levy changes.
Data from the Malaysia Palm Oil Board shows that 2025 CPO production reached a record 20.28 million tonnes, supported by improved fresh fruit bunch yields of 17.77 tonnes per hectare and higher oil extraction rates.
Planted area grew 1.6% year-on-year to 5.7 million hectares, driven by replanting initiatives across Peninsular Malaysia, Sabah and Sarawak.
However, exports declined 9.7% to 15.26 million tonnes amid weaker demand from India, China and the EU, leading to ending stocks of 3.05 million tonnes, the highest since February 2019.
Looking ahead, MBSB anticipates modest production growth of 1.0% in 2026, with exports projected to remain soft at 15.1 million tonnes due to persistent weak demand, keeping ending stocks elevated at 3.18 million tonnes.
Analysts expect CPO prices to trade between RM4,000 and RM4,500 per tonne from June, influenced by Indonesia’s B45 mandate and narrowing spreads against rival vegetable oils.
Both RHB Research and MBSB Research highlighted that Malaysian-centric planters such as SD Guthrie, Johor Plantations Group, Sarawak Oil Palms and IOI Corp are likely to outperform given domestic positioning and lower exposure to Indonesia’s higher levy regime.