* April palm oil stocks seen at 1.70 mln T vs 1.69 mln T in March

* Production likely at 1.53 mln T, highest since Dec 2013

* Exports seen rising 3.8 pct to 1.29 mln T

* Malaysian Palm Oil Board data due May 12, after 0430 GMT

By Anuradha Raghu

KUALA LUMPUR, May 8 (Reuters) – Malaysian palm oil stocks inched up to a three-month high in April as output of the tropical oil continued to rise, a Reuters survey ahead of official data showed, with a pick up in export demand checking a greater rise in inventories.

Bigger stockpiles in Malaysia, the world’s second-largest palm grower, would further weigh on benchmark prices that have dropped nearly 12 percent since touching 2,916 ringgit ($900) a tonne in March, their highest since September 2012.

The median forecast of six traders and planters surveyed by Reuters put Malaysian palm stocks at 1.70 million tonnes in April, their highest since January and up just 0.8 percent from 1.69 million tonnes in March.

Production was seen at a median of 1.53 million tonnes, up 2.4 percent, and the highest level since December 2013.

The market were caught off guard last month when Malaysia’s crude palm oil output jumped 17 percent to 1.50 million tonnes, after yields recovered faster than expected from crop-damaging drought earlier this year.

The Malaysian Palm Oil Association, a group of growers, has estimated that palm oil output in April rose about 3.4 percent to a similar 1.55 million tonnes, according to a MPOA official.

Malaysian exports of palm products recovered slightly, the Reuters survey also showed, with the median at 1.29 million tonnes, up 3.8 percent from 1.24 million tonnes in March.

Cargo surveyors earlier reported that Malaysia’s palm exports in April rose between 1.3 and 1.7 percent to about 1.22 million tonnes compared to a month ago, with bigger imports from the world’s top edible oil buyers India and China, as well as Pakistan, offseting weaker demand in Europe and the United States.

FACTORS TO WATCH

Fears that an El Nino weather pattern will heavily disrupt Southeast Asian palm output this year have begun to fade, with no signs of an impact in top producers so far.

Oil palm trees typically react to extreme weather – such as a strong El Nino that can induce drought in the region while drenching other parts of the world – only several months later.

“Looking at the current weather now, there’s plenty of rain in the evenings which is good for production,” said a trader with a foreign brokerage firm in Malaysia. “El Nino is supposed to be dry weather. It is not happening on our side yet.”

Top grower Indonesia said an El Nino effect is unlikely to curb output until 2015, and it expects to produce more than 28 million tonnes of palm oil this year.

Demand for palm oil, used as cooking oil and as an ingredient in foodstuffs ranging from margarine, biscuits and condensed milk, is slated to pick up this month as buyers replenish edible oil stocks ahead of the Muslim festival of Eid al-Fitr celebrated this year in July.

Traders said Indonesia, the world’s most populous Muslim-majority nation, may curb its overseas sales of palm oil to meet its own domestic consumption needs ahead of the festive-season.

“Indonesia will cut down on exports from May onwards to cater to its own need first. So buyers will turn to Malaysia,” said a Malaysian-based trader whose firm trades with India, Pakistan and several other Middle Eastern destinations.

“May exports will definitely be better,” this second trader said.

LOCAL CONSUMPTION

The median figures from respondents implied domestic consumption in April of around 239,483 tonnes, above the average range between 150,000 and 180,000 tonnes.

Breakdown of April’s estimates (in tonnes):

Range Median Production 1,512,116 – 1,587,000 1,533,500 Exports 1,268,462 – 1,310,000 1,290,449 Imports 9,084 – 12,000 10,000 Closing stocks 1,687,709 – 1,794,000 1,701,277 * Official stocks of 1,687,709 tonnes for March, plus the above estimated output and imports give a total April supply of 3,231,209 tonnes. Based on the median of the exports and closing stock estimates, Malaysia’s domestic consumption in April would be 239,483 tonnes.

($1 = 3.2505 Malaysian ringgit) (Editing by Tom Hogue)

Source : REUTERS