Strong El Nino To Keep CPO Prices Elevated Through 2H 2026, Peak In 1H 2027 - Kenanga IB
KUALA LUMPUR, July 7 (Bernama) -- Crude palm oil (CPO) prices are expected to remain elevated in the second half of 2026 (2H 2026) and peak in the first half of 2027 (1H 2027), driven by a very strong El Nino expected to hit Southeast Asia later this year.
In a research note today, Kenanga Investment Bank Bhd (Kenanga IB) said a very strong El Nino can reduce global palm oil production by between two and five per cent year-on-year, while even a moderate El Nino can support higher CPO prices.
“On June 12, we raised our average CPO price expectations to RM4,400 per tonne for 2026 from RM4,250 previously, and to RM4,450 per tonne for 2027 from RM4,200.
“Essentially, instead of CPO prices moderating in 2H 2026 after a strong second quarter, we now expect prices to remain elevated throughout 2H 2026 and peak around 1H 2027 on the back of a very strong El Nino hitting Southeast Asia later this year,” it said.
Kenanga IB maintained its ‘overweight’ call on the plantation sector, with IOI Corporation Bhd, Kuala Lumpur Kepong Bhd, PPB Group Bhd, United Malacca Bhd and TSH Resources Bhd as its sector picks.
“All in, we stay ‘overweight’ as we believe the plantation sector’s valuations are still not demanding considering the defensive demand for edible oil and asset-rich companies’ balance sheets with palm oil prices staying elevated,” it said.
-- BERNAMA