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Malaysia's palm oil inventories are expected to peak in October after rising for a sixth straight month in September, a shift that could mark a turning point for crude palm oil (CPO) prices, according to Public Investment Bank Bhd (PublicInvest).
The research house expects September stocks to exceed 3 million tonnes, the highest level since 2018. It attributed the build-up mainly to weaker buying from China, Europe and the Middle East during the peak production season.
At the same time, buyers have turned to Indonesian CPO on the back of more competitive pricing. PublicInvest noted that Indonesia's palm oil exports rose 35% month-on-month, while Malaysia's exports fell.
The bank expects Malaysia's inventories to start declining from November as output growth slows, with a sharper drawdown projected for mid-2027 as the delayed effects of El Niño weigh on fresh fruit bunch yields and CPO production.
CPO prices have averaged RM4,430 per tonne so far this year, trending towards PublicInvest's full-year forecast of RM4,500 per tonne.
PublicInvest maintained its 'Overweight' rating on the plantation sector, citing the risk of El Niño-driven supply disruptions and continued strength in crude oil prices.
Its top picks in the sector are Sarawak Plantation Bhd and Ta Ann Holdings Bhd, selected on the basis of their valuations and earnings growth prospects.
Source: New Straits Times