Kuala Lumpur: Crude palm oil (CPO) prices are anticipated to average RM4,200 per tonne in 2025, driven by a high price premium of palm oil over soybean oil observed in the first quarter of 2025, stated Kenanga Investment Bank Bhd (Kenanga Research).

According to BERNAMA News Agency, Kenanga Research noted that CPO prices for 2025 have decreased from the elevated levels seen in the fourth quarter of 2024, with the premium over soybean oil having disappeared. The research highlighted a contraction in bio-diesel demand, particularly in the United States, although buyers are currently re-stocking.

Kenanga Research pointed out that a supply deficit is likely in 2025, with inventory levels expected to worsen year-on-year. As a result, prices are expected to remain firm, ranging between RM4,000 and RM4,500 per tonne. The investment bank forecasts CPO prices to average RM4,200 per tonne in 2025 and RM4,000 per tonne in 2026, maintaining its ‘overweight’ stance on the plantation sector.

The research emphasized the defensive nature of plantation earnings, as food demand accounts for 70 percent of edible oil demand, with biodiesel fuel comprising 23 percent. It anticipates resilient demand with year-on-year growth, despite challenges such as a global economic slowdown, trade protectionism, and geopolitical tensions.

Additionally, Kenanga Research reported that the sector’s balance sheet remains strong, with many planters holding net cash or manageable gearing, and margins staying healthy due to firm CPO and strong palm kernel prices.