CPO prices stay elevated, but gains uneven for SGX’s agri counters

[SINGAPORE] Crude palm oil (CPO) prices are expected to stay high in 2025 as inventories shrink and output weakens, deepening a supply crunch that could fuel earnings growth for Singapore-listed plantation stocks. 

The Malaysian Palm Oil Board’s data released last week showed stockpiles at a low of 1.5 million tonnes as at end-February, due to weak production levels. This marks Malaysia’s fifth consecutive month of declining inventories, underscoring tight supply conditions in the world’s second-largest palm oil producer and exporter.

This reinforced RHB Research’s “overweight” stance on the sector, citing strong pricing power and a projected 12.4 per cent earnings growth for plantation players in 2025, driven by firm selling prices amid tight supply and strong demand.

“We expect palm oil inventory to remain tight and below the two-million tonne mark, as it is the low output season,” said RHB’s analyst Hoe Lee Leng, adding that the team maintained its forecasts for CPO prices at RM4,300 (S$1,289) per tonne in 2025 and RM4,100 next year.

Pointing to recent declines in regional plantation stocks, Hoe noted that “regional valuations have shrunk and are now averaging 11 times earnings (compared to the historical average of 14 times), while earnings growth remains robust”.