KUALA LUMPUR (Jan 9): RHB Investment Bank expects the crude palm oil (CPO) price to decrease slightly to RM4,250 per tonne in 2026 from RM4,306 per tonne last year due to more balanced global supply and demand dynamics.

While cautioning that geopolitics and policy changes could cause volatility, the house maintained its 'neutral' stance on the plantation sector.

In a report on Friday, RHB said it prefers SD Guthrie Bhd (KL:SDG) with a target price of RM6.95, Johor Plantations Group Bhd (KL:JPG) with a TP of RM1.80, Sarawak Oil Palms Bhd (KL:SOP) with a TP of RM4.15 and IOI Corporation Bhd (KL:IOICORP) with a TP of RM4.75, while its foreign top picks are London Sumatra Indonesia with a TP of 1,760 rupiah and First Resources with a TP of S$2.55.

The research house highlighted a potential shift towards the US soybean market, implying a negative factor for the crude palm oil price as CPO become less competitive than soybean oil.

"US soybeans are currently trading at a 12% price premium over South American beans. If China continues to fall short of its 25 million-tonne annual commitment for 2026-2027, and other global buyers shift to cheaper South American beans, US stocks could reach multi-year highs," added the research house.

RHB said a weak La Niña since mid-December 2025 had no major impact in South America but for the next few weeks, the weather remains crucial.

"If the weather conditions deteriorate the soybean output, the soybean price will rise, making palm oil more competitive and driving up demand and the price for CPO," said RHB.

The house stated that the implementation of the B50 biodiesel mandate by the Indonesian government will increase CPO utilisation by 30% year-on-year in tonnes for the year.

"US policy biofuel implementation might be delayed to postpone the withdrawal of fiscal incentives or foreign feedstock until 2027 or 2028, which would affect the competitiveness of CPO negatively," said the house.

RHB expects the plantation sector to be fundamentally more balanced in 2026 as no major geopolitical risks would affect the supply and demand of vegetable oil crops.