Yield recovery, productivity a boon for Sarawak Oil Palms in coming year
by James Wong · Borneo Post OnlineKUCHING (Jan 2): Sarawak Oil Palms Bhd (Sarawak Oil Palms) is expected to deliver healthier production performance in 2026 supported by gradual yield recovery and improving productivity, according to analysts from Public Investment Bank Bhd (PublicInvest Research) after a recent site visit to the group’s operations in Miri.
In a note, the research house said prolonged wet weather in early 2025 disrupted pollination activities, leading to malformed fresh fruit bunches (FFB) and weaker output.
As a result, Sarawak Oil Palms’ first nine months of financial year 2025 (9MFY25) FFB production recorded a marginal decline and is expected to fall for the full financial year.
“Nevertheless, the production outlook for 2026 remains healthy, supported by gradual yield recovery and improving productivity. Management projects a low single-digit increase in production for FY26,” it said.
Meanwhile, production costs are projected to rise marginally to RM2,400–RM2,500 per metric tonne due to a 5 per cent increase in fertiliser costs.
Year to date, Sarawak Oil Palms has replanted about 4,470 hectares and continues to target a long-term annual replanting programme of 4,000 to 5,000 hectares with an average immature area of around 12,000 hectares.
However, PublicInvest Research noted that its downstream outlook remains challenging.
It said that while margins have eased from their 2024 peak, the biodiesel segment continues to be profitable.
Year to date, downstream operations have remained in the black, although management did not disclose specific figures.
Refining operations, with total throughput of about 761,000 metric tonnes, are expected to remain under pressure amid intensifying competition from Indonesian refiners as they enjoy cost advantages from crude palm oil (CPO) export tax structures.
“Nevertheless, the biodiesel plant continues to generate steady margins, underpinned by the state’s blending mandate.
“Meanwhile, the phytonutrient segment, which is in collaboration with Avant Health, is expected to be loss-making in the near term as it is still in early stages,” it said.
Management has guided for a CPO price of RM4,200–4,300 per metric tonne in 2026, broadly in line with PublicInvest Research’s forecast of RM4,200 per metric tonne.
In terms of land optimisation, the group has about 5,000 acres located along the Pan Borneo Highway earmarked for potential asset monetisation. It also has a 10,000-hectare plantable area designated for mixed-crop planting.
Sarawak Oil Palms operates Sarawak’s only biodiesel plant, with a processing capacity of 600 metric tonnes per day.
As at September 2025, the group manages a total landbank of 123,111 hectares, of which 83,308 hectares are planted. Of this, 43 per cent is on peat soil and 57 per cent on mineral soil.
Its integrated upstream operations comprise 42 estates and seven palm oil mills, with a total installed capacity of 555 metric tonnes per hour. About 36 per cent of FFB processed is sourced from external suppliers.
While Sarawak Oil Palms maintains sustainability standards above global RSPO requirements, its 43 per cent exposure to peat soil plantations continues to pose a challenge to securing formal RSPO certification due to carbon emission considerations.