New Straits Times (11/09/2026) - KUALA LUMPUR: Crude palm oil (CPO) prices are expected to trade between RM4,400 and RM4,600 a tonne in the near term, backed by favourable biofuel economics, strengthening El Nino conditions and tighter global vegetable oil supply.

CIMB Securities Sdn Bhd said elevated energy prices had improved biofuel margins, with Indonesian CPO shifting from a premium to gasoil in August 2025 to a discount in August this year.

This is expected to support biodiesel demand and reduce the subsidy burden of Indonesia's B50 biodiesel mandate.

"Meanwhile, unusually dry conditions and low rainfall in Indonesia and Malaysia over the past six weeks, compounded by reduced fertiliser application, raise downside risks to palm oil production from 2027," it said in a note.

The research firm said the forward market was already signalling tighter supply, with palm oil for January to March 2027 trading at a premium of more than RM594 a tonne over October 2026.

"Reduced sunflower oil exports from Russia and Ukraine could also encourage substitution towards palm oil, particularly as Indian refiners typically increase sunflower oil purchases in October-March," it said.

However, elevated Malaysian palm oil inventories could cap near-term gains, with stocks expected to rise another 5.3 per cent month-on-month (MoM) to 2.98 million tonnes in September.

Malaysian palm oil inventories rose 7.5 per cent MoM and 28.2 per cent year-on-year (YoY) to 2.82 million tonnes in August, exceeding CIMB Securities' forecast of 2.68 million tonnes and consensus expectations of between 2.76 million and 2.78 million tonnes.

The inventory build was mainly due to weaker-than-expected exports, while production rose just 1.4 per cent MoM to 1.82 million tonnes. On a YoY basis, production fell two per cent.

CIMB Securities said exports fell 7.5 per cent MoM and 2.4 per cent YoY to 1.29 million tonnes, likely reflecting weaker demand amid elevated CPO prices.

Domestic disappearance provided some offset, rising 4.8 per cent MoM to 376,000 tonnes, while imports were broadly flat at 49,566 tonnes.

"Overall, the larger-than-expected inventory build reflects a widening imbalance between recovering seasonal production and softer export demand," the firm said.

It said production was likely to remain seasonally firm in the coming months, making a meaningful recovery in exports important to prevent inventories from rising further.

"The higher stock level could cap near-term CPO price upside, although downside may remain cushioned if biological tree stress continues to constrain production growth," it said.

CIMB Securities maintained its 2026 and 2027 CPO price forecasts at RM4,450 and RM4,550 a tonne respectively, as well as its "Overweight" call on the sector.

Its top picks are IOI Corp Bhd, Kuala Lumpur Kepong Bhd and Hap Seng Plantations Holdings Bhd.

Read more at https://www.nst.com.my/business/corporate/2026/09/1530240/cpo-prices-seen-rm4400-rm4600-tighter-supply