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BUSINESS • 12/06/2026 02:40 PM

Kenanga IB Raises 2026 CPO Price Forecast By Four Pct To RM4,400 Per Tonne

KUALA LUMPUR, June 12 (Bernama) -- Kenanga Investment Bank Bhd (Kenanga IB) is raising its calendar year 2026 (CY2026) crude palm oil (CPO) price forecast by four per cent to RM4,400 per tonne from RM4,250 per tonne, citing the El Niño phenomenon.

In a note today, the investment bank said it also revised its CY2027 CPO price forecast upwards by six per cent to RM4,450 from RM4,200 per tonne.

It said historically, El Niño tends to lift CPO prices, with prices typically rising either in the second half of the year in which El Niño begins, or more often, in the first half of the following year.

“The price changes vary considerably, from an initial quarter-on-quarter (q-o-q) dip to spikes of 10-40 per cent q-o-q in subsequent quarters.

“On the whole, we believe a 5-10 per cent increase is reasonable for now, considering CPO and palm kernel prices have already been elevated since the West Asia conflict,” the bank added.

Kenanga IB said that while the impact is partially priced in, further upward revisions cannot be ruled out under a very strong El Niño scenario, including to valuation price-to-book multiples, which remain unchanged for now.

The bank noted that a severe El Niño can curb palm oil output depending on sea surface temperature deviation from the norm.

“Palm oil production is not affected unless it is a very strong El Niño, whereby prolonged dryness (six months or longer) can disrupt fruiting and flowering cycles.

“As El Niño usually starts in the second half, crop yields in the following year are more affected under a very strong El Niño. Globally, palm oil supply can thus swing from year-on-year (y-o-y) growth to a contraction of between two per cent and nine per cent, based on historical observations,” it said.

-- BERNAMA

 

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