11/06/2026 (New Straits Times), Kuala Lumpur - Crude palm oil (CPO) prices averaged RM4,499 per tonne in May, down 1.5 per cent from April but 15.9 per cent higher year-on-year (YoY), as weaker export demand and easing geopolitical tensions weighed on market sentiment.

Despite the softer performance in May, MBSB Research expects CPO prices to improve slightly in June, forecasting an average of RM4,646 per tonne, up 3.3 per cent month-on-month (MoM).

It said prices could be supported by seasonally softer output during the pollination phase, as well as the anticipated rollout of Malaysia's B15 and Indonesia's B50 biodiesel programmes in June and July 2026.

MBSB Research maintained its tactical "Positive" stance on the plantation sector, citing supportive crude oil prices and biodiesel blending mandates that could boost domestic consumption and tighten palm oil supply.

However, it noted that a potential ceasefire between the US and Iran remains a downside risk, as further easing in geopolitical tensions could weaken energy prices and exert pressure on palm oil prices.

MBSB Research also said downstream players may face higher freight and insurance costs.

Higher fertiliser prices, driven by rising urea costs, and increased diesel-linked logistics expenses could weigh on upstream plantation companies in the second half of 2026.

Nevertheless, the firm retained its 2026 CPO price assumption of RM4,300 per tonne and downgraded IOI Corp Bhd to "Neutral" from "Buy" following its recent share price appreciation.

On the supply side, CPO production fell to 1.52 million tonnes in May, down 7.0 per cent MoM and 14.4 per cent YoY, reflecting weaker output in both Peninsular Malaysia and Sabah and Sarawak.

The steepest declines were recorded in Kedah, Kelantan and Negeri Sembilan, while only Sarawak regions continued to register growth.

National fresh fruit bunch (FFB) yield declined 14.8 per cent YoY to 1.27 tonnes per hectare, while FFB deliveries to mills fell 15.8 per cent to 7.62 million tonnes.

Despite lower production, the oil extraction rate (OER) remained firm at 20.11 per cent, supported by drier weather conditions that improved oil quality and reduced moisture content.

Meanwhile, palm oil inventories rose to 2.43 million tonnes at end-May, up 5.1 per cent from April and 22.4 per cent higher YoY, following weaker exports.

Exports fell 14.5 per cent MoM and 21.4 per cent YoY to 1.11 million tonnes as key importing countries shifted towards lower-priced Indonesian supplies after Jakarta introduced new export regulations.

MBSB Research said Malaysia's palm oil exports were further affected by Indonesia's one-gate export policy, which increased product availability and enabled more competitive pricing from Indonesian refiners.

As a result, buyers continued to favour Indonesian palm oil, supported by wider pricing discounts and a weaker rupiah.

The firm said local CPO prices started the month at RM4,567 per tonne before easing to RM4,484 per tonne at month-end.

It attributed the decline to reduced concerns over crude oil supply disruptions following easing tensions in the Middle East, which weakened energy-market support for palm oil prices.

Expectations of stronger seasonal production and softer export demand also contributed to the more cautious market outlook.

https://www.nst.com.my/business/corporate/2026/06/1460540/cpo-slips-may-prices-seen-recovering-june