KUALA LUMPUR, April 29 — Crude palm oil (CPO) prices are expected to average at RM4,200 per tonne in 2025 due to a high price premium enjoyed by palm oil over soyabean oil in the first quarter of 2025 (1Q 2025), said Kenanga Investment Bank Bhd (Kenanga Research).
In a note, the investment bank said that year-to-date 2025 CPO prices have eased from elevated levels of 4Q 2024, with premium prices over soybean oil having disappeared.
It said bio-diesel demand has also contracted, notably in the United States (US), but buyers are busy re-stocking.
“Overall, a supply deficit remains likely in 2025 with inventory levels expected to worsen year-on-year (y-o-y), hence, prices are likely to stay firm, between RM4,000 per tonne to RM4,500 per tonne.
“Our assumption is for CPO to average RM4,200 per tonne in 2025 and RM4,000 per tonne in 2026,” it said, while maintaining its “overweight” call on the plantation sector.
Kenanga Research said it continues to like plantations for their defensive earnings as food demand makes up 70 per cent of edible oil demand, with 23 per cent as biodiesel fuel.
Hence, it said demand is resilient with y-o-y growth likely even amid a global economic slowdown, trade protectionism, and tensions.
Besides, the sector balance sheet remained strong, as many planters hold net cash or manageable gearing, with margins staying healthy thanks to firm CPO and strong palm kernel prices.
