Lang
Hong Leong Investment Bank (HLIB) has raised its 2026 crude palm oil (CPO) price forecast to 4,350 Malaysian ringgit per tonne, an increase of 150 ringgit per metric tonne, reflecting near-term supply tightness.
In a note published two days ago, the bank said crude palm oil prices are expected to remain elevated in a range of 4,500 to 4,600 ringgit per tonne in the second quarter of 2026, before moderating from the third quarter onwards.
It added: "Our longer-term crude palm oil price assumption is unchanged at 4,200 ringgit per tonne from 2027, as supply conditions gradually normalise.
Based on our estimates, every 100 ringgit per metric tonne increase in our average crude palm oil price forecast would lift earnings forecasts for the plantation companies we cover by three to eight per cent."
HLIB noted that the conflict in West Asia is driving a multi-channel shock, lifting crude palm oil prices through energy-linked demand and near-term supply tightness.
The note continued: "Sharp increases in fertiliser costs could prompt a crop switch to soybeans, capping the upside over the medium term. Logistical disruption adds temporary price premiums.
Crude palm oil is a substitute for crude oil. Higher crude oil prices will strengthen biodiesel economics, lifting demand for vegetable oils and reinforcing crude palm oil's role as an alternative for energy markets."
HLIB maintains an Overweight recommendation on the sector, favouring upstream plantation companies with fixed input costs and stronger margin visibility.
Separately, RHB Investment Bank Bhd said crude palm oil prices have continued to climb, up 19 per cent since the start of the West Asia conflict to average 4,188 ringgit per tonne year to date, driven by the sudden surge in crude oil prices, up 46 per cent since the war began, and its wider repercussions.
The bank said: "The most significant consequence is likely to be higher biodiesel mandates in Indonesia and globally.
In Malaysia, there is also talk of implementing the B20 biodiesel mandate again. Some politicians say a B20 mandate would be 20 sen per litre cheaper than current market prices."
Malaysia's current B10 mandate consumes between 1.3 and 1.4 million tonnes of crude palm oil, while a B20 mandate would double that volume.
Source: Bernama