KUALA LUMPUR, June 11 — Crude palm oil (CPO) prices are expected to trade higher in the second half of 2026 (H2), supported by the likelihood of a strong El Nino and elevated soybean and rapeseed oil prices amid rising biofuel demand, CGS International Securities Malaysia Sdn Bhd said.
In a note today, the stockbroking house cited data from the United States National Oceanic and Atmospheric Administration (NOAA), which showed an 80 to 90 per cent probability of an El Nino event between June and next February, a development seen as supportive of CPO prices.
“Based on historical trends, Malaysia’s fresh fruit bunch (FFB) yield typically declines by 13 to 16 per cent year on year during a strong El Nino, while CPO prices increase by 22 to 23 per cent year on year,” it said.
CGS International expects Malaysia’s palm oil inventories to edge lower month on month in June, as tighter export availability from Indonesia is likely to benefit Malaysian exports.
“Separately, higher domestic consumption under the B12 biodiesel programme is also expected to contribute to further inventory reduction,” it added.
The firm maintained its “overweight” call on the sector, adding that Malaysian producers are likely to benefit more than Indonesian peers from higher CPO prices, supported by stronger exports amid policy uncertainty in Indonesia.
Meanwhile, Hong Leong Investment Bank Bhd (HLIB) maintained its 2026 CPO price assumption at RM4,350 per metric tonne (mt).
“We expect prices to remain elevated at RM4,500 to RM4,600 per mt in the second quarter of 2026 before moderating from the third quarter onwards.
“Our longer-term CPO price assumption is unchanged at RM4,200 per mt from 2027,” it said.
The investment bank also maintained its “overweight” stance on the sector, pending a reassessment in its forthcoming H2 outlook.
“While elevated crude oil prices should continue to support near-term CPO prices, we believe the current upcycle may be front-loaded, with medium-term risks from supply-side adjustments in competing vegetable oils,” HLIB added.
