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CPO Prices Hold Steady, but Low Output and High Costs Cloud Plantation Sector Outlook

Sarawak Plantations

MIDF Research reports that crude palm oil (CPO) prices in March 2025 remained nearly flat, averaging RM4,740 per metric ton (-0.4% month-on-month, +12.4% year-on-year), closing at RM4,705. Prices peaked at RM4,835 early in the month due to supply concerns tied to Ramadan demand but softened later. For April, MIDF expects stable prices between RM4,000–4,500, aligning with seasonal production recovery. CPO output was steady at 1.39 million tonnes (+16.8% month-on-month, -0.4% year-on-year), hampered by wet weather and poor crop quality. Looking ahead, La Niña’s persistence may limit 2025 production growth to 1%, supporting elevated prices.

High Costs

MIDF Research also reports that palm oil stockpiles dropped to 1.51 million tonnes in March 2025 (+3.5% month-on-month, -8.8% year-on-year), driven by flat production and weak exports of 1.0 million tonnes (-24.3% year-on-year). Exports of CPO (-53.1% year-on-year), CPKO (-81.3% year-on-year), and other derivatives like oleo (-20.2% year-on-year) and biodiesel (-5.5% year-on-year) also declined, pressured by high CPO prices averaging RM4,740 per metric ton.

Elevated feedstock costs strained refineries, while PKC sales fell 34.7% year-on-year. MIDF maintains a NEUTRAL outlook for the sector, expecting stable CPO prices but margin pressures from high production costs and low mill utilization. They recommend focusing on larger players like IOI Corp and SD Guthrie, while advising caution on smaller firms reliant on external FFB purchases.

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