Middle East conflict drives up crude palm oil prices, related concept stocks benefit significantly | Lianhe Zaobao

The Middle East conflict has caused crude palm oil prices to soar, benefiting local listed plantation stocks and palm oil related stocks. Analysts have raised their forecasts for the average annual price of crude palm oil and are optimistic about the outlook for palm oil-related companies, including Wilmar and Bumitama. Statistics from Lianhe Zaobao show that from the market close on February 27, 2026, to the market close on March 18, the average stock price of eight palm oil-related companies listed in Singapore rose by 18.8%, with Kencana leading the way with an 80% increase. These companies had previously reported strong fiscal year 2025 results. Shortly after the outbreak of the Middle East conflict, Macquarie Securities Research released a report on March 5, maintaining an optimistic view on Singapore-listed plantation operators, believing that crude palm oil prices will continue to be supported amid emerging upward risks. The report raised the target prices for Wilmar and First Resources by 7% and 13% to SGD 3.75 and SGD 2.60, respectively, but the stock prices of both companies quickly surpassed the new target prices. A report released by the research department of Oversea-Chinese Banking Corporation (OCBC) on Tuesday (March 17) pointed out that due to the impact of the Middle East conflict, crude palm oil prices rose by 15.9% from February 27, 2026, to March 16, reaching RM 4,624 per metric ton from RM 3,989 per metric ton, with crude oil and soybean oil prices also rising simultaneously. This reflects an overall adjustment in commodity prices rather than a disruption in palm oil supply. Higher crude palm oil prices benefit upstream operators' earnings OCBC has raised its forecast for the average price of crude palm oil in 2026 from RM 4,200 per metric ton to RM 4,300 per metric ton, noting that crude palm oil prices are likely to continue to fluctuate until the market gradually returns to normal. While higher crude palm oil prices benefit the earnings of upstream operators, they may be a double-edged sword for downstream companies. OCBC analysts are optimistic about the fundamentals of Bumitama and Wilmar, and believe that among the two, the rise in Bumitama's stock price is more closely related to the increase in crude palm oil prices Extended Reading Performance of palm oil-related stocks benefits from price increases, but stock prices have shown mixed performance this year Surge in oil prices and declining inventories drive palm oil outlook; Analysis: Planting stocks still influenced by Middle East situation Yao Weili, an analyst at China Galaxy Securities International (CGS International), predicted in an interview with Lianhe Zaobao that crude palm oil prices will decline in the second quarter but may rise again in the second half of the year due to potential weather risks such as the El Niño phenomenon and the impact of lower-than-expected yields in Indonesia. She pointed out that if crude oil prices remain high, Indonesia may reconsider implementing the B50 biodiesel mandate (a mandatory blend of 50% palm oil and 50% traditional diesel), which would increase demand for crude palm oil. She maintains her 2026 crude palm oil price forecast at MYR 4,500 per metric ton. Yao Weili also noted that the current high crude palm oil price environment is favorable for upstream plantation operators, such as Yiyuan Resources and Bumida Agricultural. Priyanka Sachdeva, a senior market analyst at Phillip Nova, has a basic forecast for 2026 crude palm oil prices: there is a 50% probability that the average price will remain between MYR 4,400 and MYR 4,600 per metric ton; if the situation in the Persian Gulf remains chaotic and oil infrastructure suffers significant damage, there is a 30% probability that prices will soar to MYR 4,800 per metric ton. The recent surge in crude palm oil prices is mainly due to strategic bottlenecks in the Hormuz region, but is also limited by weak edible demand and the recovery of supplies from Indonesia and Malaysia. Sachdeva stated, "Fundamentally, the supply and demand pattern for crude palm oil has not changed, and prices will fluctuate within a certain range rather than rise sharply." She also believes that the rise in crude palm oil prices can directly benefit pure upstream companies like Yiyuan Resources and Bumida Agricultural, while comprehensive operators like Wilmar and Golden Agri-Resources will experience both gains and losses due to profit pressure from downstream businesses