Tighter global supplies positive for CPO sector
Analysts suggest that while the plantation sector remains subdued, tighter global supplies and the impact of El Nino could drive a recovery in crude palm oil (CPO) prices by 2027. Research firms are advising investors to accumulate stocks in anticipation of this supply cycle shift.
Why it matters
Palm oil is a critical global commodity; shifts in supply and price have significant impacts on food production and biofuel industries.
PETALING JAYA: The plantation sector is expected to remain subdued in the near term, but improving supply-demand conditions could support a stronger recovery in crude palm oil (CPO) prices in 2027.
The anticipated impact of a strong El Nino on output, alongside potentially tighter global palm oil supplies, could provide a catalyst for plantation stocks after their recent pullback.
Maintaining its “overweight” rating on the sector, CIMB Research said the recent weakness in plantation stocks offered an opportunity to accumulate selected stocks.
The brokerage wrote in its report: “We view the recent weakness in CPO prices and plantation share prices as an opportunity to accumulate selected names ahead of a potential 2027 tightening palm oil supply cycle.”
Its preferred Malaysian plantation stocks are IOI Corp Bhd , Kuala Lumpur Kepong Bhd (KLK), Genting Plantations Bhd and Hap Seng Plantations Holdings Bhd .
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