Malaysian analysts see rising production to weigh on crude palm oil prices

KUALA LUMPUR, June 11 (Xinhua) -- Malaysian analysts foresee crude palm oil (CPO) prices remaining under pressure amid improved production.

Maybank Investment Bank said in a note on Wednesday that strong output will necessitate CPO prices to stay competitive at below 4,000 ringgit (943 U.S. dollars) per ton in the near term to boost demand.

According to the research house, the Malaysian Palm Oil Board (MPOB)'s stockpile continues to climb on strong production as May's output was the highest monthly for the first half since 2020.

"June's output may temporarily ease month-on-month before resuming its upward trend in the third quarter and peak output may likely be in September or October this year," it added.

MIDF Research also said in a note on Wednesday that CPO prices are expected to remain under pressure, as production is likely to perform, leading to a ceteris paribus performance for 2025.

"Moving ahead, we anticipate that the CPO prices will remain stable, hovering within the range of 3,900 ringgit to 4,200 ringgit per ton. This is typically in line with seasonal production trends, as the pollination period ends in March and palm oil output is expected to recover, potentially leading to an increase in closing stock levels," the research house said.

It also foresees an average CPO price target of 4,300 ringgit per ton for 2025.

"Looking ahead, with the end of the inter-monsoon and pollination periods, drier weather and a faster recovery in fresh fruit bunches evacuation activities expected from May onwards, this allows estate productivity to gain momentum, particularly in terms of harvesting and manuring activities," it noted.

It projected local CPO production to reach 19.5 million tons in 2025 (+1 percent year-on-year), with the bulk of the recovery anticipated to materialize in the second half, driven by an improved set of crops and estate efficiencies.

Hong Leong Investment Bank also maintained its 2025-2026 CPO price assumptions of 4,000 ringgit per ton and 3,800 ringgit per ton, with the view that continued output recovery (particularly from Indonesia) will continue to cap palm oil prices over the near to medium term.

The research house opined that the palm oil stock level will likely remain at the near 2 million tons mark in June 2025, as seasonally higher crop yields and subdued festive-driven demand are expected to be offset by potentially stronger demand from India, following its recent decision to reduce the import duty on CPO to 10 percent from 20 percent. ■