Palm Oil Inventories Expected To Ease From November As Production Declines

KUALA LUMPUR, Nov 11 (Bernama) --  Malaysia’s palm oil inventory glut is expected to ease from this month as oil palm trees enter the low-production season, potentially stabilising crude palm oil (CPO) prices, according to research houses.

In a note today, Public Investment Bank Bhd said palm oil output could tighten next year, driven by seasonally low production and the negative impact of El Niño.

It said palm oil inventories reached another record high of 3.6 million tonnes in October, up 3.2 per cent month-on-month, as production also hit a new record despite strong export momentum.

The investment bank said palm oil exports hit their highest level in two years at 1.7 million tonnes, bolstered by strong demand from the European Union and India.

“We expect the strong CPO export momentum to continue in November, given the current attractive CPO price level,” it added.

Meanwhile, CIMB Securities Sdn Bhd projected palm oil inventories to ease 1.5 per cent month-on-month to 3.57 million tonnes in November as seasonal production declines outpace exports.

In a separate note, it said record-high Malaysian palm oil inventories and weaker crude oil prices were weighing on near-term CPO prices.

“We expect inventories to decline seasonally from November as production eases from its October peak, potentially stabilising CPO prices.

“Looking into 2027, we see rising supply risks from a strengthening El Niño, with strong to very strong conditions expected through Jan-Mar 2027,” it said.

CIMB Securities said prolonged drought in Indonesia could adversely affect fresh fruit bunch yields over the next 12-18 months, while potential foreign labour shortages in Malaysia pose downside risks to production.

“We maintain our 2026/2027 CPO price forecasts of RM4,450/RM4,550 per tonne,” it said.

Both Public Investment Bank and CIMB Securities maintained their “overweight” ratings on the plantation sector.

-- BERNAMA