"The strength in CPO price was supported by tight supply from production challenges in major producing countries, resilient demand from staple food consumption, and the steady rollout of the B40 biodiesel mandate.
"Additional support came from sustained high prices of substitute oils like soybean and restocking ahead of major festivals," adds OCBC.
On the other hand, consumption in major markets such as Indonesia is seen to grow. In Indonesia, for example, crude palm oil production was up 6.9% y-o-y to 12.3 million tonnes in 1HFY2025, driven by higher biofuel demand.
"That said, expectations of improved supply from Malaysia and Indonesia, helped by more favourable weather, may temper further upside of CPO price," says OCBC.
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Citing Bloomberg consensus projections, crude palm oil prices is seen to rise towards RM4,453 per metric tonne in 4Q2025, before easing to around RM4,294 in 2026.
For its 1HFY2025, Golden Agri-Resources reported earnings that were boosted by stronger plantation output and prices. Its upstream business delivered strong growth, fuelled by weather improvements, higher mature yielding plantations, and higher prices.
"While we expect softer FFB production in 2HFY2025 due to Golden Agri’s aggressive replanting program and dry weather in recent months, earnings are likely to be supported by stronger crude palm oil prices.
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The revised fair value of 30 cents is based on 0.55x P/B.
Golden Agri-Resources was down 1.67% to 30 cents ahead of the lunch break on Sept 18, but p 13.46% year to date.
