New Straits Times (24/02/2026) - KUALA LUMPUR: Crude palm oil (CPO) and palm kernel (PK) prices are expected to stay firm into 2026, supported by a modest decline in Malaysian output and tight lauric supply, CIMB Securities Sdn Bhd said.

In a note, the firm said it attended a lauric oils seminar on February 9 featuring Leow Huey Chuen, Julian McGill, and Peter Smith from Glenauk Economics. The seminar covered supply trends in palm and lauric oils, as well as demand developments in oleochemicals and specialty fats.

"Leow highlighted that palm oil prices rebounded despite high palm oil stock levels in Malaysia, supported by stronger fund sentiment and weaker-than-expected production, with 2026 Malaysian palm oil output projected to decline modestly while Indonesia records slight growth, leading to gradual inventory drawdowns.

"McGill expects palm kernel prices to remain relatively firm owing to flattish supply, declining kernel extraction rates, and tight coconut oil availability, with limited scope for near-term surplus despite softer oleochemical demand," it noted.

CIMB Securities said Smith cautioned that the oleochemical sector faces a challenging outlook due to overcapacity and margin pressure through 2025–2027.

McGill was more constructive on specialty fats, noting increased reformulation and greater use of palm-based fractions.

He suggested that specialty fats have shown greater resilience in absorbing lauric supply in the current tight market environment.

The research firm said the view of relatively firm palm oil and palm kernel PK prices is positive for companies with greater upstream earnings exposure, such as SD Guthrie Bhd, Hap Seng Plantations Holdings Bhd, Genting Plantations Bhd, United Malacca Bhd, and Ta Ann Holdings Bhd.

"We are encouraged by the greater use of palm-based mid-fractions and PK-derived fats in coatings, non-dairy creamers, and speciality food applications, which should underpin long-term demand for palm oil over time.

"In contrast, the expected increase in overcapacity within the oleochemical industry is slightly negative for palm oil players with meaningful oleochemical exposure such as IOI Corp Bhd and Kuala Lumpur Kepong Bhd (KLK)," it said.

However, the firm noted that the impact will likely be partially offset by their large upstream segments, which provide more stable feedstock supply and help cushion downstream margin pressures.

Furthermore, the firm said IOI Corp and KLK's downstream earnings appear to have bottomed in financial year 2025 owing to margin pressure.

"We retain an "Overweight" sector view, with SD Guthrie, IOI, and Hap Seng Plantations as our top picks," it added.

Read more at https://www.nst.com.my/business/corporate/2026/02/1384201/palm-oil-palm-kernel-prices-expected-firm-2026-cimb