Indonesia CPO: Continued inventory depletion to boost CPO prices

Research evidence excerpt

Indonesia CPO: Continued inventory depletion to boost CPO prices

Nomura Securities Malaysia Sdn Bhd

27 July 2026Indonesia CPO

EQUITY: AGRI-RELATED

Supercycle zone Research Analysts

Indonesia Research Team

Continued inventory depletion to boost CPO prices Raghavendraraghavendra.divekar@nomura.comDivekar, CFA - NSM

+603 2027 6893

Production likely to be flat or decline

Onshore expertWe believe global crude palm oil (CPO) production is either going to be stagnant or

decline in the medium term, even without the Middle East war disruption. Our main thesis Sandy Ham (sandy.ham@verdhana.id),

is CPO yield erosion will continue, as plantation age profile is heavily skewed towards

Samuel Christianolder trees in Indonesia and Malaysia (which together account for ~85% of global CPO

(samuel.christian@verdhana.id),production, see Fig.6). We think that Indonesia, as the largest producer globally, has

been too slow in replanting its smallholder’s plantation (small-scale farmers – 45% of Jody Wijaya (jody.wijaya@verdhana.id),

Indonesia’s total plantation area); at this acute stage, we believe cost incurred to

rejuvenate smallholder farmers’ plantations would be massive, given the large Nayla Yasmin

(nayla.yasmin@verdhana.id),accumulated area. On top of that, there is a shortage of quality palm oil seeds, suggesting

Indonesia’s CPO production may suffer long-term production yield pressure, unless the Theonshoreexperts,whoare

government reopens large new plantation areas. We also believe the confiscated employedbyPTVerdhanaSekuritas

plantation lands under SOE might produce less harvest yields due to inefficient Indonesia(“Verdhana”)andarenot

operations, given the lack of skilled manpower. Currently, the confiscated lands are close licensedoutsideIndonesia,have