Lang
CIMB Securities said the European Union's decision to delay its deforestation law by another year has provided temporary relief to palm oil exporters.
The delay to the legislation, also known as the EU Deforestation Regulation (EUDR), eases compliance risks and cost pressures on exporters while reducing the immediate risk of weaker demand for palm oil. However, CIMB Securities warned that the delay prolongs regulatory uncertainty for producers.
"We view this development as mildly positive for palm oil producers, as the delay should ease concerns over weaker palm oil demand in the first quarter of 2026 due to EUDR implementation," the company said in a note on Wednesday.
It added that there would also be room for further negotiations or possible policy adjustments before the new deadline.
The EU Deforestation Regulation, which seeks to curb deforestation linked to commodities consumed in the EU, covers products such as palm oil, cocoa, coffee, soybeans and beef. It is estimated to target around 10% of global deforestation attributable to EU consumption.
The regulation has faced resistance from major supplier countries including Malaysia, as well as some EU member states, over high compliance costs and potential supply chain disruptions.
Environmental activists, however, have criticised the delay as undermining the EU's climate agenda, warning that political and reputational risks grow with each postponement.