KUALA LUMPUR, Dec. 23 (Xinhua) -- Malaysia's plantation sector is expected to face a mixed outlook heading into 2026. While firms such as Nomura Research and CGS International see structural demand drivers lifting prices and earnings, TA Securities remains cautious, citing softer export demand and margin pressures from higher supply.

Nomura Research said in its recent report that it is positive on Malaysia's plantation sector heading into 2026.

According to the research house, the longer-term outlook for palm oil remains positive due to increased demand from emerging markets, its increased use as a biofuel in Indonesia, stagnant growth in palm oil hectarage and weak stock/usage of major oils.

Besides, in 2026, Nomura expects crude palm oil (CPO) prices to rise about 2 percent year-on-year to 4,400 ringgit (1,079 U.S. dollars) per ton, as it believes Indonesia is on track to expand its biodiesel mandate to B50 from the second half of 2026.

"We are also concerned about weaker production in Indonesia due to the government's ongoing seizure of plantation land that is deemed to be illegal," it said.

While downstream margins were weak in 2025, it sees them improving year-on-year in 2026 due to increasing demand for oleochemicals and refined products.

Meanwhile, CGS International expects strong earnings growth for Malaysia's plantation sector in 2026-2027.

According to the research house, this will be supported by structural changes on the back of rising biodiesel demand, tightening global vegetable oil exports, slower palm oil supply growth, and long-term supply risks from land issues in Indonesia, potentially reducing production from the second half of 2026 onwards and supporting CPO prices.

Ta Securities, however, maintained its neutral view for Malaysia's plantation sector.

"Looking ahead to 2026, we expect CPO prices to moderate, averaging around 4,000 ringgit per ton (-4.8 percent year-on-year)," it noted.

According to the research house, the easing price outlook is underpinned by rising global production, softer export demand and intensifying competition from alternative edible oils as supply recovers in sunflower- and soybean-producing regions.

"While production growth should support overall yields, the softer price environment would likely keep upstream margins contained, especially for producers with higher cost structures," said the research house. (1 ringgit equals 0.25 U.S. dollars) ■