12/04/2011 (Agrimoney.com) - Firm export data helped steady palm oil prices on Monday, despite regulators saying that stocks of the vegetable oil in Malaysia had hit a three-month top, boosted by a bigger-than-expected recovery in production.

Palm oil stocks in Malaysia, the second-ranked producer of the vegetable oil, hit 1.61m tonnes in March, rising by 9.0% month-on-month, and beating market expectations by more than 50,000 tonnes, the Malaysian Palm Oil Board said.

The increase reflected a 29% jump to 1.41m tonnes in production, amid a seasonal upswing complemented by improved weather conditions as the extremes blamed on the La Nina weather pattern fade.

Indeed, while palm oil output typically recovers at this time of year from a seasonal low in January or February, last month's revival was some 150,000 tonnes more than the market had expected.

Export support

Nonetheless, palm oil prices held firm, standing 0.2% higher at 3,406 ringgit a tonne in late deals in Kuala Lumpur, after the board, Malaysia's industry regulator, showed the country's exports of the vegetable oil rising 10.8% to 1.23m tonnes month on month.

This figure was more than 100,000 tonnes higher than the market had forecast, after cargo surveyors came in with modest figures for the rise. Intertek Testing Services had pegged them only 0.5% lower, while rival Societe Generale de Surveillence (SGS) had put the increase at only 2.3%.

Indeed, the data helped investors shrug off further weak data from cargo surveyors on Monday, when Intertek put Malaysia's palm exports so far in April down 22%, while SGS pegged the decline at 8%.

Malaysia's exports this month have been given an extra headwind of a drop to 22.5%, from 25%, in a tax that Indonesia, the top palm oil producer, imposes on its exports.

Soyaoil support

Separately, data over the weekend showed Chinese imports of edible vegetable oils tumbling 22% month-on-month in March. Compared with a year before, the decline was 8.7%.

China vies with India for top rank among world vegetable oil importers.

However, palm oil prices also gained support from a 2.5% rise on Friday in futures of rival soyaoil in Chicago, after the US Department of Agriculture trimmed estimates of world production and stocks of the vegetable oil in 2010-11.

Chicago soyaoil for May gave back some ground on Monday, easing 0.4% to 59.51 cents a pound for May delivery.