RHB Research lifts 2027, 2028 CPO price forecasts on El Niño threat
RHB Research raised its 2027 and 2028 crude palm oil price forecasts to RM4,500 and RM4,400 per tonne respectively, up from RM4,300, citing the growing likelihood of a powerful El Niño late this year.
Source: The Edge Malaysia · July 31, 2026 at 3:02 AM · AI-assisted report
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KUALA LUMPUR, 31 JULY 2026 —
RHB Research Raises 2027, 2028 Palm Oil Price Forecasts on El Niño Concerns
Market Impact
KUALA LUMPUR (July 30) — RHB Research has increased its crude palm oil (CPO) price forecasts for 2027 and 2028 to RM4,500 and RM4,400 per tonne, respectively, up from RM4,300, citing the rising probability of a strong El Niño weather pattern later this year.
The research house noted that most weather models project a very strong El Niño event in 2026, with the most significant impact expected from October onwards. While maintaining its 2026 CPO price assumption at RM4,400—currently trading at RM4,600–4,700—RHB revised its 2027 and 2028 forecasts to reflect expectations of sustained price strength due to reduced production from drier conditions.
El Niño typically brings drier weather, which disrupts palm oil output and supports higher prices. However, RHB cautioned that the event’s intensity remains uncertain, leading to a conservative outlook with only a moderate price increase projected.
The firm also indicated it would incorporate the new price assumptions into its earnings forecasts and adjust for changes in environmental, social, and governance (ESG) scores during the upcoming results season. Despite the upward revisions, RHB maintained an "overweight" stance on the sector, citing undervalued stock valuations.
RHB’s top stock picks in the palm oil sector include Johor Plantations Group Bhd (KL: JPG), Sarawak Oil Palms Bhd (KL: SOP), IOI Corp Bhd (KL: IOI), Hap Seng Consolidated Bhd (KL: HSPLANT), and SD Guthrie (KL: SDG).
Potential downside risks identified by RHB include the escalation of the US-Iran conflict, weather anomalies beyond El Niño, and fluctuations in crude oil prices.
The research house also highlighted an improvement in the sector’s ESG scores, rising from 2.7 to 2.8 out of 4.0, driven primarily by enhancements in the environmental pillar. Social and governance scores remained unchanged.
Malaysia Market Impact The revised CPO price forecasts could bolster investor confidence in Malaysia’s palm oil sector, which is a key economic driver. Higher price expectations may support plantation stocks, particularly those with strong ESG credentials, as seen in RHB’s upgraded sustainability ratings.
Sector and Company Specifics RHB’s upward revisions align with broader market expectations of tighter palm oil supplies due to El Niño. The firm’s "overweight" stance and stock recommendations suggest selective opportunities within the sector, particularly for companies with robust operational efficiency and ESG compliance.
Outlook The outlook for CPO prices remains contingent on El Niño’s severity and duration. If the weather event materializes as forecasted, prices could remain elevated through 2028. However, risks such as geopolitical tensions or unexpected weather patterns may introduce volatility. Investors are advised to monitor production updates and ESG-related developments closely.
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