Palm Oil Sector's Earnings Likely Supported by Stronger El Nino — Market Talk

A stronger El Nino outlook is expected to support crude palm oil prices and plantation earnings, Kenanga IB analyst Khoo Teng Chuan says in a note. He cites data from the U.S. National Oceanic and Atmospheric Administration showing the probability of a severe or "very strong" El Nino rising to 63% in June from 33% in May. Historically, severe El Nino events have impacted palm oil output by disrupting fruiting and flowering cycles, tightening supply, and lifting prices, he says. Khoo raises his CPO price forecasts to 4,400 ringgit a ton from 4,250 ringgit a ton in 2026 and to 4,400 ringgit a ton from 4,200 ringgit a ton for 2027. Kenanga maintains an overweight rating on the plantation sector, and pegs IOI Corp., Kuala Lumpur Kepong and TSH Resources as top picks. (yingxian.wong@wsj.com)