Malaysia's palm oil exports may rise in July ahead of US' 'reciprocal' tariff hike
The firm expects the local stockpile to increase by six per cent on monthly basis to 2.16 million tonnes in July 2025, supported by higher crude palm oil (CPO) production on the back of more harvesting days.
Meanwhile, palm oil exports are forecast to climb five per cent to 1.32 million tonnes amid a potential front-loading of palm oil exports to the US before new tariffs come into force.
Effective Aug 1, the US will impose a 25 per cent import tariff on all Malaysian palm oil products under its "reciprocal tariff" regime, while Indonesian goods will be subject to a higher 32 per cent rate.
CIMB Securities said these tariffs will raise the cost of palm oil for US buyers, likely prompting a shift toward cheaper domestic alternatives such as soybean oil, benefiting US soybean farmers.
It noted that ahead of the tariff hike, buyers may consider front-loading purchases to take advantage of the current lower 10 per cent tariff rate on US imports from Malaysia.
"The US accounted for just 1.9 million tonnes or 2.4 per cent of global palm oil consumption. The current seven percentage point tariff differential between Malaysia and Indonesia may give Malaysian palm oil producers a slight competitive edge.
"We also take the view that the recent passing of US President Donald Trump's 'Big Beautiful Bill' which includes an extension of the 45Z Clean Fuel Production Credit through 2031, is likely to support US soybean oil prices by boosting biodiesel demand," it added.
CIMB Securities still "neutral" on the sector sector as we expect CPO prices to remain range-bound.
The firm maintains its 2025 full-year CPO price forecast at RM4,200 per tonne, supported by Indonesia's biodiesel mandates and limited expansion of new palm oil planting areas.
As for July, it projects CPO prices to stay within the RM3,700 to RM4,100 per tonne range.
Sector-wise, IOI Corp Bhd remains a top pick for its merger and acquisition prospects, with a target price of RM4.11 per share, while Hap Seng Plantations Bhd is favoured as a value play with a target price of RM1.88.
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