KUALA LUMPUR, Sept. 11 (Xinhua) -- Crude palm oil (CPO) prices are expected to remain firm over the next three months despite rising Malaysian inventories and weak exports, with potential El Niño-related supply disruptions providing support into 2027, research houses said on Friday.
BIMB Securities expects CPO prices to remain at elevated levels, although seasonally stronger production and high inventories could limit sharp near-term gains.
The research house maintained its CPO price forecasts at 4,400 ringgit (1,082 U.S. dollars) per ton for 2026 and 4,500 ringgit per ton for 2027, with an upside bias.
It said key supports for prices include stronger vegetable oil demand from expanding global biodiesel mandates, a potentially tighter global palm oil supply-demand balance and the impact of El Niño on regional output.
The eight-month 2026 average CPO price stood at 4,413 ringgit per ton, broadly in line with BIMB Securities' full-year forecast.
Official data showed Malaysia's palm oil end-stocks rose 7.5 percent month-on-month and 28.3 percent year-on-year to 2.82 million tons in August, as weaker exports outweighed a modest increase in production.
BIMB Securities expects inventories to remain around this level in the coming month amid the seasonal peak-crop cycle before easing somewhat in the fourth quarter on stronger festive and holiday demand.
MBSB Research also expects CPO prices to remain firm in September, with an average price of 4,514 ringgit per ton, up 0.6 percent month-on-month. It maintained its 2026 average CPO price target at 4,400 ringgit per ton.
The research house said renewed U.S.-Iran tensions could keep crude oil prices elevated, providing additional support for CPO, while the probability of a very strong El Niño has risen to about 90 percent, keeping potential supply disruption firmly on the radar.
However, it warned that near-term downside risks remain largely demand-driven. Continued weak exports could push inventories towards the psychological 3-million-ton level, capping price gains.
Maybank Investment Bank similarly warned that weak August exports were a concern, noting that the impact of El Niño on palm oil production typically lags and may only become evident in 2027.
"There is a good chance that Malaysia's stockpile may continue to snowball and touch 3 million tons by October or November 2026," said the research house.
Short-term CPO upside could also be constrained by competing vegetable oils trading around parity with CPO, demand rationing at elevated prices and uncertainty over Indonesia's B50 biodiesel mandate, it added. ■
