Malaysia's plantation sector poised for stronger earnings on tightening supply, biodiesel push — analysts
08/04/2026 (The Edge Malaysia), Kuala Lumpur - Malaysia’s plantation sector is poised for a stronger earnings cycle as tighter regional supply controls and rising biodiesel demand continue to underpin crude palm oil (CPO) prices, according to recent sector research reports.
Thailand’s move to tighten CPO export controls from April 7 is expected to lend near-term support to CPO prices by limiting supply availability in the global market.
Under the new measure, exporters must obtain prior written approval for each shipment to safeguard domestic supply amid rising local consumption and biodiesel demand.
While Thailand accounts for only a relatively small share of global palm oil exports, analysts said the policy reinforces a broader regional trend of prioritising domestic energy security and food supply, particularly as higher crude oil prices improve biodiesel economics.
Research houses have subsequently adjusted their CPO price assumptions for 2026 and 2027.
HongLeong Investment Bank raised its 2026 estimates by RM150 per tonne to RM4,350 per tonne but kept its long term forecast of RM4,200 per tonne from 2027 as supply conditions gradually normalise.
"We expect prices to remain elevated at RM4,500-4,600 per tonne in 2Q26 before moderating from 3Q26 onwards," it said in a note on Wednesday.
"Based on our estimates, every RM100 per tonne increase in our average CPO price projection would lift earnings forecasts for plantation companies under our coverage by 3-8%," it added.
TA Research raised its 2026 and 2027 price assumptions to RM4,300 per tonne and RM4,200 tonne, respectively.
The firmer outlook is expected to benefit upstream plantation players, particularly those with sizeable Indonesian exposure. Kuala Lumpur Kepong Bhd (KL:KLK), IOI Corp Bhd (KL:IOICORP) and SD Guthrie Bhd (KL:SDG) were highlighted among the key proxies to capture the upside from stronger CPO prices and biodiesel-led demand.
TA Research maintained its 'overweight' call on the plantation sector, citing tighter inventories, improving biodiesel profitability and supportive policy developments across major producing nations.
However, analysts cautioned that risks remain, including a potential easing in geopolitical tensions that could drag crude oil prices lower and weaken biodiesel economics, as well as softer edible oil demand from major importing countries such as India and China.
Still, the sector’s near-term outlook remains constructive, supported by what analysts described as a structurally stronger demand base for palm oil.