Palm Oil Stock Level Likely To Increase Further This Month

KUALA LUMPUR, April 11 (Bernama) -- Palm oil stock level will likely rise further in April 2025 on the back of weak crude oil prices, an absence of festive-driven demand and natural cyclical patterns.

In a note today, Hong Leong Investment Bank Bhd (HLIB) said palm oil stock level rose by 3.5 per cent month-on-month (m-o-m) to 1.56 million tonnes in March 2025, the first increase in six months due to output recovery.

It is, therefore, maintaining 2025-2026 crude palm oil (CPO) price assumptions of RM4,000 per metric tonne (mt) and RM3,800/mt, with a view that CPO price strength will dissipate when supply prospects recover.

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HLIB said the escalating US-China trade tension will likely result in China turning to palm oil as part of its vegetable oil imports, but this may be weighed down by demand uncertainties.

Meanwhile, MIDF Amanah Investment Bank anticipates CPO prices will remain stable, hovering within the lower range of RM4,000-4,500/mt in April.

“This is typical in line with seasonal production trends. The pollination period ends in March with palm oil output expected to recover, which may lead to a rise in closing stock levels,” it said in a note today.

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It opined that the sector’s top line will continue its uptick in the first half of 2025 in line with higher average CPO price assumptions.

“However, margins are likely to remain under pressure due to the persistent elevated production cost because of high locked-in fertiliser costs in the second half of 2024, coupled with elevated external fresh fruit bunches purchase expenses amid low mills utilisation rates,” it said.

-- BERNAMA