Malaysian palm oil stocks seen rising to 2.93mil tonnes in December
Malaysian palm oil stocks are expected to rise to 2.93 million tonnes in December 2025 as exports lag production. Prices have weakened amid high inventories, soft demand, policy uncertainty and competition from other oils. Analysts expect stockpiles to ease gradually and maintain 2026 CPO price forecasts around RM4,200 per tonne.
KUALA LUMPUR: Malaysian palm oil stocks are expected to rise three per cent month-on-month (MoM) to 2.93 million tonnes in December 2025, as export growth of just two per cent MoM is likely insufficient to absorb the increase in production, according to CIMB Securities Sdn Bhd.
In a note, the firm said palm oil production is projected to fall 11 per cent MoM to 1.72 million tonnes in December 2025.
According to Amspec, palm oil exports fell 10.3 per cent MoM to 396,477 tonnes in the first 10 days of December 2025.
“In November 2025, the average crude palm oil (CPO) price declined 7.3 per cent MoM to RM4,089 per tonne, bringing the first 11 months of 2025 average to RM4,312 per tonne, broadly in line with the firm’s 2025 forecast.
“However, prices have weakened recently, with spot CPO at RM4,029 per tonne and three-month futures at RM4,045 per tonne,” it noted.
Palm oil stockpiles reached their highest level since March 2019, rising 13 per cent MoM to 2.84 million tonnes in November 2025.
Although output fell and domestic consumption increased, exports dropped sharply, resulting in higher-than-expected stock levels compared with the Reuters survey estimate of 2.66 million tonnes.
Output fell 5.3 per cent MoM to 1.94 million tonnes in November 2025 as the lower cropping season began, although production for the first 11 months of 2025 rose 3.4 per cent to 18.45 million tonnes.
Exports plunged 28.1 per cent MoM to 1.21 million tonnes in November 2025, weighed down by the absence of festive-driven restocking and seasonally weaker demand, as buyers in the northern hemisphere typically cut back purchases due to clouding in colder temperatures.
According to Intertek Services, the decline was driven mainly by lower shipments to Africa, the European Union and India.
CIMB Securities said the recent softness is likely due to limited follow-through on Indonesia’s B50 mandate, concerns over rising Malaysian stockpiles, lack of clarity on the United States biofuel policy review, and buyers staying on the sidelines due to high inventories in producing countries and delays in implementing the European Union Deforestation Regulation.
The firm said palm oil is also facing stronger competition from other edible oils amid weaker demand from China.
As a result, CIMB Securities expects the higher-than-expected stockpile to keep a lid on CPO prices until either exports strengthen meaningfully or there is clearer policy progress on biodiesel usage in the US and Indonesia.
The recent price decline has pushed palm oil to a slight discount to substitutes such as soybean, rapeseed and sunflower oils, which may help support exports.
Given expectations of slowing output into the first quarter of 2026 due to seasonality, CIMB Securities believes prices will remain supported above RM4,000 per tonne and is maintaining its average CPO price forecast of RM4,200 per tonne for 2026.
The firm has kept its “Overweight” rating on the sector.
Meanwhile, Hong Leong Investment Bank Bhd (HLIB) said stock levels are likely to decline gradually over the next few months, as palm oil demand typically weakens during the November to February period.
HLIB said stock levels may have peaked in November 2025, with the seasonally lower cropping cycle now taking effect.
“CPO prices have fallen about 10 per cent since end-October 2025, bringing the year-to-date average to RM4,318 per tonne, due to weaker demand sentiment and seasonal production effects.
“We are maintaining our 2025 to 2026 CPO price assumptions of RM4,300 per tonne and RM4,200 per tonne, respectively,” it noted.
HLIB has maintained its “Overweight” call on the sector, with top picks being SD Guthrie Bhd and Hap Seng Plantations Holdings Bhd.
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Source : Business Times
