In 1–7 November 2024, CPO prices surged +4.5% WoW, averaging MYR 4,931/MT and hitting a two-year high for the second straight week, primarily driven by Indonesia’s tight supply outlook.
In 2026, Indonesia plans to implement B50 (CPO-50% diesel fuel) as part of its strategy to reduce reliance on fossil fuels and save over USD 7.9bn in fuel imports. Consequently, domestic consumption of CPO for biofuel is expected to increase, especially with the persistent shortage, now standing at 3.9mn kl. Currently, Indonesia is using B35 and plans to transition to B40 starting on 1 January 2025.
On the production side, we expect December’s CPO output to increase due to rainy season, boosting productivity and exerting downward pressure on CPO prices.
The potential for higher output in December prompts us to retain our FY24 average forecast at MYR 4,100/MT (YTD: MYR 4,057/MT), with NSSS (TP IDR 265/sh) and TAPG (TP IDR 800/sh) as our top picks, supported by their relatively young plantation assets (less than 10 years old), which should translate to higher crop and extraction yields.
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