Palm Oil

Indonesia Holds B40 Line, Weighs on Palm Oil Outlook as Select Counters Show Technical Promise

Indonesia shelving its B50 biodiesel plan clouds palm oil demand prospects, while resilient egg consumption and improving technical signals in selected stocks offer pockets of stability for investors.

Indonesia has stepped back from plans to introduce a B50 biodiesel mandate this year, opting instead to maintain its existing B40 policy while further evaluations continue. The decision marks a clear shift from earlier guidance that pointed to a B50 rollout in the second half of the year.

Palm Oil

The move is broadly negative for crude palm oil (CPO) demand expectations, as a higher biodiesel blend would have increased domestic consumption. Analysts view the current palm oil–gasoline price gap as too wide to support B50 without substantial subsidies, making the delay unsurprising.

Despite the softer demand outlook, CPO prices have remained relatively resilient. Futures were last seen slightly lower at RM4,022 per metric tonne, while the 2026 CPO price forecast is unchanged at RM4,200 per tonne. The plantations sector remains rated Neutral.

In the consumer space, Teo Seng is expected to see earnings normalise following the removal of government subsidies. Egg demand, however, is projected to stay firm, supported by its position as the most affordable protein source.

Increased festive spending and tourism activity should further underpin consumption. While near-term earnings may soften, initiatives to improve operational efficiency, expand downstream value-added products such as processed eggs and mayonnaise, and benefit from lower feed costs are expected to cushion the impact.

Earnings are forecast to decline by an average of 22% in FY25–26 before recovering modestly in FY27. The stock retains a Neutral rating with a target price of RM0.98.

On the technical front, AGMO Holdings is showing signs of a potential trend reversal. A decisive break above RM0.380 could open the way toward RM0.410, while failure to hold RM0.345 would signal renewed weakness.

Similarly, Pantech Global is attempting to exit its downtrend. A move above RM0.470 may see prices test RM0.500, with RM0.430 acting as a key support level.

Overall, while macro headwinds persist in plantations, selective opportunities remain across defensives and technically improving names.

Source: Public Investment Bank

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