MBSB IB Retains RM4,400 CPO Price Target For 2026 As El Niño Threat Looms
KUALA LUMPUR, Sept 24 (Bernama) -- MBSB Investment Bank Bhd (MBSB IB) is maintaining its projection for the average crude palm oil (CPO) price at RM4,400 per tonne for 2026, supported by concerns over tightening supply as hotspots surge across the region.
The investment bank noted that in August, hotspots had more than doubled year-on-year to 265 in Malaysia and 15,186 in Indonesia, with Kalimantan accounting for 87.3 per cent of Indonesia’s total, signalling worsening dry conditions ahead of a potentially very strong El Niño.
“This comes as the probability of a strong-to-very strong event is projected to climb from 77 per cent in October to 98 per cent by December.
“If dry conditions persist, weaker fresh fruit bunches (FFB) yields could tighten palm oil (PO) supply and support CPO prices,” it said in a note today.
MBSB IB highlighted that the Malaysian Meteorological Department (MetMalaysia) expects the Southwest Monsoon to end in September, followed by inter-monsoon thunderstorms that could temporarily alleviate dry conditions.
Hence, it said Malaysian estates remain in reasonable condition for now, while Indonesia’s concentrated hotspots point to greater immediate moisture stress and supply risk.
It said the Malaysian Palm Oil Board’s (MPOB) yield figures suggest that the supply impact remains uneven, with Malaysian estate FFB yield averaging 10.83 tonnes per hectare in the first eight months of 2026 (8M2026), down 1.5 per cent year-on-year (y-o-y) from 11 tonnes per hectare in 8M2025.
It said yields in Peninsular Malaysia fell 7.8 per cent y-o-y to 11.29 tonnes per hectare, while Sabah and Sarawak combined improved 5.8 per cent y-o-y to 10.48 tonnes per hectare from 9.98 tonnes per hectare previously.
“Current harvests therefore have yet to show a nationwide weather-driven contraction.
“However, sustained moisture stress could affect subsequent bunch output, turning today’s rainfall deficits into weaker yields and tighter CPO availability in 2027,” it said.
Hence, MBSB IB maintains its “positive” (tactical) stance on the plantation sector.
-- BERNAMA