EUDR Framework Finalisation To Have Minimal Impact On Oil Palm Planters - HLIB
KUALA LUMPUR, Sept 22 (Bernama) -- The finalisation of the European Union (EU) Deforestation Regulation (EUDR) framework provides greater clarity on its implementation, ahead of the regulation’s enforcement end-December 2026, and has a much smaller impact on oil palm plantation companies.
Hong Leong Investment Bank Bhd (HLIB) said that to support the EUDR’s enforcement, the European Commission has adopted two implementing measures, namely the Delegated Act and the Implementing Act.
The Delegated Act updates and simplifies the list of products covered under the regulation, while the Implementing Act sets out the functioning of the Information System for submitting Due Diligence Statements (DDS) and simplified declarations.
HLIB said the Delegated Act expands the regulation’s scope to include additional downstream palm-based products, and would have minimal incremental compliance costs.
“Meanwhile, the Implementing Act primarily clarifies the procedures for submitting DDS through the EU Information System,” it said in a research note today.
HLIB said that the Implementing Act has a much smaller impact on oil palm plantation companies and primarily sets out the technical rules governing the EUDR Information System, including the submission of DDS, simplified declarations and contingency procedures in the event of system outages.
“We do not expect the Implementation Act to result in any material increase in compliance costs, as most integrated planters have already invested in traceability systems, Geographic Information System mapping and due diligence processes over the past two years.
“Instead, it enhances implementation certainty and allows companies to finalise their compliance plans ahead of the regulation’s enforcement,” it added.
HLIB said that Malaysian planters, particularly those with established exposure to the EU market, are well positioned for the EUDR’s implementation, having already established the necessary traceability and due diligence systems to meet its compliance requirements.
“We maintain 2026-2027 average crude palm oil (CPO) price assumptions of RM4,450 per metric tonne (mt) and RM4,300/mt,” it added.
HLIB also maintained an overnight call on the sector, underpinned by the expectation that elevated CPO prices will be sustained through the second half of 2026, supported by tightening supply conditions and resilient demand.
“We continue to favour planters with predominantly upstream operations and greater exposure, given their higher earnings leverage to CPO price strength and lower exposure to foreign regulatory and policy risks,” it said.
-- BERNAMA