Plantation Sector Gains Momentum on Strong Demand and Biodiesel Mandate

The plantation sector in Malaysia is looking up as demand for crude palm oil (CPO) remains strong. According to TA Research, Indonesia's B50 biodiesel mandate and firm energy prices will continue to support CPO prices.

However, the research house notes that stronger seasonal production and competitive soybean oil prices may limit further upside in the near term.

The fresh fruit bunch (FFB) production is expected to improve seasonally in the second half of financial year 2026, although the recovery will vary across planters.

Looking ahead to 2027, TA Research warns that El-Nino is becoming a significant supply risk, particularly in Indonesia, due to the usual lag between dry weather and its impact on yields.