Malaysia's Palm Oil Inventory Set To Rise 15 Pct In May 2025 - CIMB Securities

KUALA LUMPUR, May 14 (Bernama) -- Malaysian palm oil stocks are expected to rise 15 per cent month-on-month (m-o-m) in May 2025 to 2.15 million tonnes, driven by higher output, according to CIMB Securities Sdn Bhd. 

The stockbroking firm also forecast crude palm oil (CPO) production to grow by four per cent m-o-m to 1.75 million tonnes and palm oil exports to increase by eight per cent m-o-m to 1.19 million tonnes. 

“However, according to Intertek, Malaysian palm oil exports fell nine per cent m-o-m to 293,911 tonnes in the first 10 days of May, reflecting a slow start to the month. 

“The recent 22 per cent decline in CPO prices to RM3,787 per tonne from a peak of RM4,835 per tonne on April 2 reflects concerns over weaker crude oil prices and the 10 per cent reciprocal import tariff imposed by the United States (US) on Malaysia and Indonesia, which makes palm oil less competitive in the US market,” it said in a note today. 

Meanwhile, palm kernel prices have also remained firm at RM3,421 per tonne, representing 90 per cent of CPO prices and indicating a shortage of coconut oil. 

Thus, CIMB Securities projected CPO prices to remain in the range of RM3,700-RM4,000 per tonne in May, given rising supply. 

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It also maintained its average CPO price forecast of RM4,200 per tonne for 2025, supported by Indonesia’s biodiesel mandates and limited expansion in palm oil planting areas. 

However, it downgraded the plantation sector rating to “neutral” following the recent downgrade of SD Guthrie to “hold” due to limited near-term catalysts, with IOI Corp remaining its preferred “buy” in the sector.

Maybank Investment Bank Bhd (Maybank IB) and Kenanga Investment Bank Bhd (Kenanga IB) also gave the sector a “neutral” rating. 

Maybank IB noted that preliminary Malaysia export estimates for shipments in the first 10 days of May 2025 by independent cargo surveyors were mixed, with Amspec showing a small growth to 302,908 tonnes (up one per cent m-o-m) while Intertek showing a nine per cent m-o-m contraction to 293,991 tonnes. 

“While still early days, the absolute exports estimates look muted. May’s export figure may only be 1 million tonnes. At this rate, the Malaysian Palm Oil Board's (MPOB) May stockpile may hit the psychological 2 million tonnes,” it said.

Maybank IB said it keeps its “neutral” stance on the sector as the current CPO spot price of below RM4,000 per tonne is likely to remain until late in the third quarter amid seasonal pick-up in output.

Hence, it maintained its forecast of RM4,000 per tonne for 2025. 

Meanwhile, Kenanga IB said upstream earnings have probably peaked in the first quarter of 2025 or the immediate preceding quarter, while downstream visibility has worsened due to the US President Donald Trump’s “Liberation Day” tariffs announcement.

“Our 2025 CPO price assumptions and earnings have also been revised downwards. Nonetheless, our revised earnings still look healthy, underpinned by still firm CPO prices due to pending supply deficit in 2025 and potentially in 2026,” it said. 

Kenanga Research has trimmed its 2025 average CPO price forecast from RM4,200 per tonne to RM4,100 per tonne while maintaining 2026 CPO price at RM4,000 per tonne on faster-than-expected reversal in palm oil price premium to soyabean in April and softer bio-diesel demand due to more competitive hydrocarbon oil prices following OPEC+ production ramp up.

-- BERNAMA