KUALA LUMPUR: Malaysia's record-high palm oil inventories could continue weighing on the commodity's near-term outlook, although analysts expect tightening supplies, weather-related production risks and stronger biodiesel demand to support crude palm oil (CPO) prices heading into 2027.

Palm oil inventories climbed for the seventh consecutive month to 3.62 million tonnes in October, up 3.2 per cent month-on-month, as higher opening stocks and increased production outweighed stronger exports.

Despite the inventory overhang, Public Investment Bank Bhd (PublicInvest) and Hong Leong Investment Bank Bhd (HLIB) maintained their "Overweight" calls on the plantation sector, citing expectations of tighter supply conditions and sustained CPO prices.