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MIDF Amanah Investment Bank has maintained a "neutral" rating on the sector, with a target price of 4,100 ringgit per tonne for crude palm oil (CPO) for 2025.
In a research note, the bank said:
"Prices were strong at the start of the month, peaking at 3,953 ringgit per tonne, before easing to 3,912 ringgit by the end of June, with the market having fully priced in expectations of a significant increase in supply."
The bank expects the average CPO price to remain stable at 3,990 ringgit per tonne in July.
It added:
"With production expected to rise, leading to higher ending stock levels, price competitiveness may weaken."
For its part, RHB Investment Bank also kept its "neutral" rating, expecting vegetable oil supply to recover while demand remains strong.
It said:
"We expect CPO prices to decline during the third quarter of 2025, before recovering again in the fourth quarter. Our new CPO price forecast is 4,100 ringgit per tonne for 2025, while the year-to-date average price stands at 4,373 ringgit per tonne."
It also noted that Malaysia lowered its July reference price for CPO to 3,730 ringgit per tonne, cutting the export duty to 8.5% from 9.5% in June.
It added:
"This could encourage exporters to accelerate shipments during July to take advantage of the lower costs."
It also pointed out that palm oil is trading at a wider discount to soybean oil of $214 per tonne, above the historical discount range of $100-150.
Meanwhile, Hong Leong Investment Bank expects palm oil stock levels to remain above 2 million tonnes in July 2025, after inventories rose for a fourth consecutive month to 2.03 million tonnes in June. It noted that potentially strong demand from India could be affected by a seasonal increase in output and the absence of festival-related demand.
"We maintain our CPO price assumptions at 4,200 ringgit per tonne for 2025 and 4,000 ringgit per tonne for 2026. We believe prices will remain weak in the third quarter before improving in the fourth," it added, keeping its sector rating at "neutral."
Public Investment Bank, meanwhile, forecast a strong recovery in exports as a result of the current wide discount of palm oil against soybean oil, which could attract interest from price-sensitive markets such as India, Pakistan and Bangladesh.
"Stock levels are likely to remain around current levels in the near term as production recovers. At the time of writing, CPO futures were trading at 4,184 ringgit per tonne, while the year-to-date average price stood at 4,362 ringgit."
It concluded by saying:
"We maintain a 'neutral' rating on the sector, expecting the annual average CPO price to come in at around 4,200 ringgit per tonne."
Source: Bernama