Malaysian Palm Oil Stocks Hit 7-Year High, CIMB Cuts 2026 Price Forecast
Malaysia’s palm oil stocks hit a seven-year high of 3.05 million tonnes in December 2025 due to strong production and weak demand. Record output outpaced exports and domestic use, pressuring prices. CIMB cut its 2026 CPO price forecast to RM4,000 per tonne.
Malaysia’s palm oil sector is grappling with a significant inventory overhang, as national palm oil stocks surged to 3.05 million tonnes in December 2025, marking a seven-year high.The stock level, which represents a 7.6% month-on-month (MoM) and a massive 78.5% year-on-year (YoY) increase, exceeded market consensus and was driven primarily by a stronger-than-expected production alongside lower domestic usage.
Key Inventory Drivers
Palm oil production for December 2025 reached 1.83 million tonnes, the highest December output since 2017 and a 23.1% YoY increase. This strong performance was supported by a rise in fresh fruit bunches (FFB) yields, particularly in states like Kelantan, Pahang, and Sabah.With production outpacing exports (1.32 million tonnes) and domestic disappearance (331,551 tonnes), stockpiles rapidly accumulated. Total palm oil output for the full year 2025 also hit a record high of 20.28 million tonnes. Meanwhile, exports for December, despite a MoM increase, were down 1.9% YoY, weighed down by weaker demand from key markets including China, India, and the United States.
Price Forecast Downgraded
In response to the elevated inventory levels and persistent price softness, CIMB Securities has revised its 2026 average Crude Palm Oil (CPO) price forecast downwards to RM4,000 per tonne from the previous RM4,200 per tonne.
Analysts project that this inventory pressure is likely to cap any price upside until stocks can normalise. The downward revision also accounts for limited progress on Indonesia’s B50 biodiesel mandate, uncertainty surrounding the US biofuel policy review, and stronger competition from other edible oils. Recent CPO spot prices have already weakened to RM4,029 per tonne.
The cut in the CPO price forecast is viewed as negative for pure planters but positive for downstream players due to lower raw material costs. Despite the price headwinds, CIMB Securities maintains an “Overweight” stance on the sector, citing land monetisation as a potential key catalyst moving forward.
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Source : Business Today
