Kenanga Investment Bank Bhd forecasts crude palm oil (CPO) prices to hover around RM4,000 per tonne in 2026, down from RM4,308 in 2025, citing tight global edible oil supply despite a slight increase in inventories.
In a research note on Friday, the bank said upstream margins are expected to remain manageable, even with some cost pressures, while downstream visibility remains weak. It highlighted that integrated plantation players are increasingly focusing on improving asset yields, with non-plantation contributions from property and renewable energy providing some support.
Kenanga noted that poor Indonesian yields in 2024 had pushed CPO prices to RM4,700–RM4,800 per tonne in late 2024 and early 2025, before stabilising around RM4,000. Indonesia’s decision to maintain its B40 biodiesel mandate and delay B50 adoption until mid-2026 also underpins the cautious outlook.
The bank maintains a ‘neutral’ stance on the sector, observing that limited growth and upside are balanced by healthy profits and solid balance sheets. Smaller plantation players may offer good value, while larger integrated groups are better positioned to weather softer prices.
Kenanga’s top picks include Kuala Lumpur Kepong Bhd for strong fresh fruit bunch output and property earnings, PPB Group Bhd (TP: RM12.50) for earnings recovery and low valuation, and TSH Resources Bhd from organic upstream growth.
