Malaysia Plantation Sector to Be Supported by Structural Demand — Market Talk

Structural demand for palm oil is expected to remain supported by biodiesel mandates in Malaysia and Indonesia, CGS International analysts Jacquelyn Yow and Prem Jearajasingam say in a note. A wide soybean oil-palm oil price spread could also preserve palm oil's competitiveness, they say. Market conditions could tighten further as a strong El Nino, forecast for late 2026, raises the risk of prolonged dry weather and weaker crude palm oil output in Malaysia and Indonesia, they reckon. Higher fertilizer costs may also discourage application, increasing yield risks over time. The outlook for CPO prices could remain constructive, given supply-constrained outlook for 2H and 2027, they add. CGS maintains an overweight rating on Malaysia's plantation sector, pegging TA Ann and Hap Seng Plantations as top picks. (yingxian.wong@wsj.com)