Kuala lumpur: Crude palm oil (CPO) prices are expected to average between RM4,100 and RM4,200 per tonne in 2026, driven by stronger crude oil prices that may enhance biodiesel economics and support Indonesia's potential B50 mandate.

According to BERNAMA News Agency, MBSB Research anticipates CPO prices to rise in March, with an average of RM4,212 per tonne, marking a 3.3 percent increase month-on-month. This increase is attributed to seasonally reduced output during pollination months, influenced by Brent crude price-led sentiment following the recent United States-Iran conflict, which could bolster the potential B50 biodiesel mandate in Indonesia.

The research firm maintains its 2026 CPO price target at RM4,200 per tonne, indicating that Malaysia Palm Oil Board prices have yet to surpass the upper resistance band of RM4,500 per tonne. The firm expressed a positive outlook on the palm oil sector, supported by a narrowing palm oil-gas oil spread.

Meanwhile, Maybank Investment Bank (Maybank IB) observed that the West Asia conflict has temporarily driven crude oil prices above US$100 per barrel earlier this week. Historically, crude oil has shown a low positive price correlation with CPO when the price gap is wide between them. However, as the gap narrows, a stronger price correlation is anticipated, with high crude oil prices potentially making biofuel mandates more economical.

Maybank IB forecasts the average selling price of CPO at RM4,100 per tonne, with potential for upside if crude oil prices exceed US$100 per barrel, making Indonesia's B50 biodiesel mandate feasible. Maybank IB maintains a "neutral" stance on the CPO sector, with top picks including SD Guthrie Bhd with a target price of RM6.59 and Sarawak Oil Palms Bhd with a target price of RM5.47.