Kuala lumpur: CIMB Securities Sdn Bhd has raised its 2026 and 2027 crude palm oil (CPO) price forecasts by RM50 per tonne to RM4,450 per tonne and RM4,550 per tonne, respectively, due to rising supply risks.

According to BERNAMA News Agency, CIMB Securities highlighted that the increased CPO prices will be supported by rising geopolitical risks, strengthening El Nino conditions, and higher biodiesel demand in Indonesia. The note pointed out that sunflower oil exports from Russia and Ukraine fell sharply in late July 2026, and are expected to remain very low in August 2026, following intensified attacks on ports, infrastructure, and commercial vessels, leading several major players to suspend operations and export offers. This situation could boost substitution demand for palm oil ahead of India's festival season from September to November.

CIMB Securities also noted that stronger El Nino conditions could decrease oil palm yields and production in Southeast Asia with a time lag, posing greater downside risks to supply from 2027 onwards. Indonesia's nationwide B50 biodiesel mandate is anticipated to consume 16.7 million kilolitres to 18.0 million kilolitres of palm biodiesel annually, providing additional support to palm oil demand.

However, the report warns that relatively high Malaysian palm oil inventories and CPO's price premium over competing vegetable oils could limit near-term price upside. The forecast predicts inventories to rise 2.1 per cent month-on-month to 2.68 million tonnes in August 2026, as higher production, which is up by 3 per cent month-on-month, more than offsets stronger exports, which are up by 6 per cent month-on-month.

As such, CIMB Securities reiterates an 'overweight' call on the plantation sector, with IOI Corp, Kuala Lumpur Kepong, and Hap Seng Plantations as its top picks.