Plantations: Inventory Heading Downtrend (Overweight)

Malaysia’s palm oil inventories recorded the sharpest decline since March 2023, as major consuming countries accelerated stockpiling amid heightened geopolitical tensions, says Public Investment Bank.

Concurrently, CPO prices rallied in March, rising more than 19%, supported by higher crude oil prices and rising freight costs following the escalation of Middle East conflicts.

These developments enhanced the relative attractiveness of biodiesel as a secure alternative fuel, thereby lifting demand for palm-based biofuels.

Plantations

“Looking ahead, we expect CPO prices to remain well supported by tightening regional export availability as Thailand and Indonesia prioritise domestic biodiesel programmes, as well as weather risks associated with the developing El Niño phenomenon.

“We also expect Malaysia’s palm oil inventories to inch towards psychological level of 2mt in the next 2 months. Maintain our Overweight call on the sector and reiterate our full-year CPO price forecast of RM4,400/mt.”

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