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Production Decline: CPO production fell -4.2% MoM to 1.2M tonnes in Feb 2025 due to a shorter working month and flood disruptions. This marks the sixth consecutive monthly decline since Sep 2024.
Inventory Drop: Palm oil inventory decreased -4.3% MoM to 1.5M tonnes, staying below the 2.0M-tonne threshold, which supports CPO prices.
Weaker Demand: Palm oil exports declined -16.3% MoM in Feb, following a -10.8% MoM drop in Jan, as demand normalized after a strong 4QCY24.
Cumulative Export: 2.2M tonnes exported in the first two months of 2025, down -7.4% YoY, amid rising CPO prices.
CPO Price: Averaged RM4,759/tonne in Feb 2025, up +1.9% MoM, supported by low inventory. Prices are expected to stay firm.
Experts at the Palm Oil Conference 2025 gave a bearish outlook, citing competition from soybean oil.
Dorab Mistry predicts MYR4,000–4,600 until March before further declines.
Dr. McGill expects prices to drop to MYR4,000–4,200 by July but rebound in 2H2025 due to Indonesia’s B40 biodiesel mandate.
Neutral Outlook: 2025 CPO price assumption remains at RM4,300/tonne.
Stock Recommendations:
HOLD: Kuala Lumpur Kepong (RM21.60), United Plantation (RM21.50), Sime Darby Guthrie (RM5.20).
Favourable Picks: Kim Loong Resources (RM2.60), Hap Seng Plantations (RM2.35), Sarawak Plantations (RM2.60) due to their exposure to rising CPO prices.
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