B50 Biodiesel Set To Add CPO Demand By 1.5 Million Tonne Per Annum
01/04/2026 (Business Today) - RHB Investment Bank Bhd (RHB Research) maintained a NEUTRAL call on the plantation sector while adopting a tactically positive trading stance, highlighting top picks including Johor Plantations Group, Sarawak Oil Palms, IOI Corp, PP London Sumatra Indonesia, SD Guthrie and First Resources.
The analysts at the research house said the Indonesia Government’s announcement that the B50 biodiesel mandate will take effect from 1 July 2026 is positive for crude palm oil demand, adding an estimated 1.5 million tonnes for the year. They noted that fuel subsidies will also be capped at 50 litres per vehicle from 1 April.
RHB Research highlighted that technical trials remain incomplete, with road tests on vehicles scheduled for June and train tests in August, suggesting B50 may be implemented in phases to ensure success.
The house also flagged potential adjustments to biodiesel pricing formulas and export levies amid rising methanol prices, which have spiked more than 50% since the start of the Middle East conflict.
RHB Research said its base case assumes the conflict ends within four to six weeks, in which scenario the sector call and crude palm oil price forecast of RM4,250 per tonne for 2026 would remain unchanged.
However, the analysts cautioned that a prolonged conflict, sustaining crude oil above US$100 per barrel or escalating above US$150 per barrel, could prompt a reassessment of price assumptions. In such a scenario, plantation stocks would benefit from higher crude palm oil prices, as earnings are more sensitive to price movements than rising costs.