The Borneo Post (11/08/2026) - KUCHING (August 11): Malaysia’s crude palm oil (CPO) price momentum is expected to remain firm in the second half of 2026 despite higher production and rising palm oil inventories, according to Public Investment Bank Bhd (PublicInvest Research).

The research house said Malaysia’s CPO stocks rose to a five-month high in July as production continued to increase amid weaker domestic consumption.

It expects CPO prices to hold up in 2H26 due to concerns over weaker palm oil yields in Malaysia and Indonesia linked to El Niño developments, which could peak towards the year-end.

“We expect CPO prices to hold up in 2H26 amid concerns over weaker palm oil yields in Malaysia and Indonesia due to El Niño development,” the research house said.

Palm oil inventories increased for the fourth consecutive month to 2.6 million tonnes in July, up 3.3 per cent month-on-month, mainly due to higher production.

The stock-to-usage ratio, however, declined from 13 per cent to 12.5 per cent.

Exports grew 14.5 per cent month-on-month, supported by higher shipments to the European Union, India and the Middle East.

Exports to the EU rose 28.4 per cent, India 14.3 per cent and the Middle East 173.8 per cent, although shipments to China and the United States declined 51.2 per cent and 14.1 per cent respectively.

CPO production increased for a second consecutive month, rising 9.4 per cent month-on-month to 1.8 million tonnes.

Production in Peninsular Malaysia and East Malaysia increased 10.6 per cent and 7.9 per cent respectively, while the seven-month 2026 fresh fruit bunch (FFB) yield edged down to 9.27 tonnes per hectare.

The research house said the sector was entering “the start of strong earnings cycle”, with Malaysia’s average CPO price in the second quarter of 2026 rising to RM4,523 per tonne from RM4,071 per tonne a year earlier.

CPO production during the quarter declined 7.1 per cent year-on-year to 4.7 million tonnes.

Among the plantation companies under its coverage, Sarawak Plantation recorded the strongest FFB production growth in 2Q26 at 12.6 per cent year-on-year, followed by Genting Plantations at 12.3 per cent.

IOI Corp was the only company to record negative growth, declining four per cent.

The research house also noted that the United States Department of Agriculture had lowered its 2026-27 Indonesian palm oil production forecast to 47.2 million tonnes from 48 million tonnes, citing persistent drought conditions that could affect crop water availability in key plantation areas from October.

Indonesian palm oil stocks are projected to decline 28 per cent year-on-year to 3.1 million tonnes.

Meanwhile, the Asean Specialised Meteorology Centre expects dry conditions to persist across southern Asean, particularly in Kalimantan and Sarawak.

July 2026 CPO prices averaged RM4,499 per tonne, down 0.07 per cent month-on-month but up 1.2 per cent year-on-year, while the year-to-date average stood at RM4,380 per tonne.

The research house maintained its Overweight call on the plantation sector and identified Ta Ann as its top pick, citing its 6.8 per cent dividend yield and above-industry-average FFB production growth.

Sarawak Plantation was the strongest-performing plantation stock year-to-date, gaining 46.8 per cent, followed by Ta Ann at 44.6 per cent.

Read more at https://www.theborneopost.com/2026/08/11/palm-oils-price-momentum-expected-to-sustain-in-2h26/