Broker: CGS International
Date of Report: October 13, 2025
Excerpt from CGS International report.
Report Summary
- Malaysia’s palm oil inventories rose to 2.36 million tonnes in September 2025, higher than market expectations, mainly due to stronger production in Sabah and Sarawak.
- Palm oil production is expected to peak in October 2025, with inventories likely to continue increasing due to seasonal factors and slowing export momentum post-Diwali.
- Despite near-term inventory pressure, CPO prices are likely to hold firm in the RM4,300-4,600/tonne range, supported by global biodiesel policy momentum such as Indonesia’s B50 mandate and potential effects from the US biofuel policy.
- Pure upstream Malaysian plantation companies like Hap Seng Plantations, Ta Ann, and SD Guthrie are preferred for their direct benefit from firm CPO prices and attractive dividend yields.
- The sector remains rated Neutral, with upside risks from geopolitical factors and policy changes, but downside risks from stronger-than-expected palm oil and oilseed production.
- ESG practices are improving in the sector, with companies like United Plantations and SD Guthrie ranking highly for ESG transparency; technology adoption is also rising to reduce reliance on foreign labor.
- Upcoming regulatory challenges include the EU Deforestation-Free Regulation (EUDR), now set for enforcement in January 2026, which may pose operational and compliance costs for exporters.
Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website : https://www.cgs-cimb.com
