CPO Prices Expected At RM4,400-RM4,600/mt As El NiÑo Raises 2027 Outlook - Analysts
KUALA LUMPUR, Oct 13 (Bernama) -- Crude palm oil (CPO) prices are expected to remain under pressure from high stockpiles and seasonal production, with the possibility of El Niño supporting prices in 2027, according to research houses.
Hong Leong Investment Bank (HLIB) said elevated inventory levels are likely to persist into October 2026 as production approaches its seasonal peak. This could weigh on CPO prices.
“Inventories are, however, expected to draw down thereafter as seasonal production eases and the lagged effects of El Niño impact output,” HLIB said in a research note today.
It has maintained its average CPO price forecasts at RM4,450 per tonne for 2026 and RM4,500 per tonne for 2027. It is “Overweight” on the plantation sector.
MBSB Investment Bank Bhd expects CPO prices to stay soft in October 2026, averaging around RM4,518 per tonne, down 2.1 per cent month-on-month.
The probability of a strong El Niño had risen to 90 per cent. This will raise concerns over supply disruptions. But persistently high stockpiles are likely to keep prices range-bound, it said.
MBSB said near-term downside risks remained largely demand-driven. Stockpiles could remain around the psychologically important three million tonnes level. It may approach four million tonnes if production continues to grow, further limiting price upside.
Meanwhile, CIMB Securities Sdn Bhd expects CPO prices to trade between RM4,400 and RM4,600 per tonne in the near term, although elevated inventories could cap gains, it said.
It added that higher energy prices have improved biodiesel economics, and prolonged dry conditions and haze in parts of Indonesia and Malaysia, compounded by reduced fertiliser application, could weigh on palm oil output from 2027.
The forward market has also pointed to tighter supply expectations. April-May 2027 palm oil futures are trading at a premium of more than RM494 per tonne over December 2026 contracts. Black Sea shipment disruptions may also support palm oil demand.
CIMB Securities cited the 2015/2016 El Niño episode, when severe drought in Indonesia and Malaysia reduced palm oil production, followed by inventory drawdowns in 2H 2016.
The research house has maintained its 2026 and 2027 CPO price forecasts at RM4,450 and RM4,550 per tonne, respectively. It reiterated its “Overweight” rating on the plantation sector.
Apex Securities Bhd, meanwhile, has estimated that cumulative CPO production through September had reached 71 per cent of its full-year 2026 forecast of 20.7 million tonnes.
It is maintaining its 2026 production forecast, but El Niño's lagged effects may impact production in 1H 2027.
“We maintain average 2026 CPO price forecasts at RM4,500 per tonne, at RM4,800 per tonne in 1H 2027, and RM4,600 in 2H 2027.
Apex Securities also said Budget 2027’s minimum wage rise to RM2,000 from RM1,700, effective June 2027, is a key consideration for the plantation sector.
The 17.6 per cent rise could weigh on plantation companies' earnings and affect their net profit by between two and 10 per cent.
“Although Budget 2027 included other measures, such as continued commitments to industrial development and the manufacturing sales-tax reclaim, the higher minimum wage is likely to have the most significant impact on the sector,” it said.
-- BERNAMA