CPO prices expected to be strengthened by global biodiesel demand — CGS International
15/04/2026 (The Edge Malaysia), Kuala Lumpur - Crude palm oil (CPO) prices are expected to be supported by demand tailwinds such as higher blending mandates announced by the United States Environmental Protection Agency (EPA), said CGS International Malaysia Sdn Bhd.
In a note on Wednesday, it said support will also come from Indonesia’s B50 mandate, which is set to commence on July 1, 2026.
“We maintain ‘overweight' on the sector, although a potential end to the West Asia conflict may lead to volatility in CPO prices.
“We continue to favour upstream players, such as Ta Ann Holdings Bhd (KL:TAANN) and Hap Seng Plantations Holdings Bhd (KL:HSPLANT), which should record relatively stronger net CPO average selling price (ASP) versus Indonesian peers,” it said.
SD Guthrie Bhd’s (KL:SDG) ongoing non-core asset monetisation initiatives could also unlock dividend payouts from potential proceeds, it added.
CGS International also said sector rerating catalysts include potential El Nino and tighter CPO supply, while downside risks include stronger-than-expected production growth in palm oil and oilseeds, and rising input costs.
Meanwhile, palm oil inventory fell 16% month-on-month (m-o-m) in March 2026 to a seven-month low of 2.3 million tonnes, according to data released by the Malaysia Palm Oil Board (MPOB) on April 10, 2026.
It was, however, 45% higher year-on-year (y-o-y) and came in slightly above Bloomberg consensus expectations of 2.2 million tonnes.
Additionally, CGS International said Malaysia’s CPO exports recorded strong growth of 41% m-o-m and 54% y-o-y.
This was attributed to the higher export levy of 12.5% imposed by Indonesia, as well as stronger demand from China, as buyers moved to secure supply ahead of potential price increases amid the escalating West Asia conflict.
It noted that CPO exports are expected to soften in April 2026, following an 18.8% surge in CPO prices from Feb 27, 2026 to March 31, 2026.
“Higher prices would likely deter major importers, such as China and India, which we think would remain on the sidelines and defer further purchases until the market stabilises.
“That said, we expect better seasonality to drive fresh fruit bunch and CPO yields in April 2026, with rising output outpacing export growth and resulting in a build-up in inventory,” it said.