Oil report

CORRECTED-PREVIEW-Malaysia Dec palm oil stockpiles seen falling 8.5%

 (Corrects month in final paragraph to December, not September)
    * Dec stocks seen -8.5% to 2.06 mln T - survey
    * Output seen -13% at 1.34 mln T - survey
    * Exports seen -5.9% to 1.32 mln T - survey
    * Malaysian Palm Oil Board data due Jan. 10

    By Mei Mei Chu
    KUALA LUMPUR, Jan 5 (Reuters) - Malaysian palm oil
stockpiles likely dropped to their lowest level in 27 months in
December, with production and export demand for the tropical oil
also falling, a Reuters survey showed. 
    Inventories in the world's second-largest palm oil producer
are forecast to fall 8.51% from November to 2.06 million tonnes
in December, the lowest since September 2017, according to a
median estimate of nine planters, traders and analysts polled by
    Dry weather in the Southeast Asian country and lower usage
of fertiliser by growers in response to the suppressed price of
palm oil in early 2017 have lead to declining output and
    "Moving forward, stocks will be a key issue for the first
quarter of 2020 for both Malaysia and Indonesia," said Marcello
Cultrera, institutional sales manager at Phillip Futures in
Kuala Lumpur. 
    December production was forecast to fall 12.99% to 1.34
million tonnes from a month earlier. 
    The sharp decline is also possibly due to flooding at some
estates and ageing estates, said Ivy Ng, regional head of
plantations research at CIMB Investment Bank said in a research
note to clients.  
    Concerns that a supply shortfall will extend into the first
half of this year, and optimism over higher biofuel mandates in
top producers Indonesia and Malaysia have boosted palm oil
prices to their highest in three years.
    The benchmark palm oil contract last traded 0.42%
lower to 3,117 ringgit ($759.68) on Friday.
    Malaysian palm oil exports likely fell 5.88% to 1.32 million
tonnes from the month before.             
    "Weaker exports could be due to the sharper rise in crude
palm oil rise relative to other edible oils, which may have led
some consumers to switch to other edible oils or reduce
discretionary biodiesel blending," Ng said. 
    However, export demand is expected to increase as India, the
world's largest edible oil buyer, slashed its import taxes on
crude and refined palm oil from Southeast Asian countries.
    Official palm oil data will be published by the Malaysian
Palm Oil Board on Jan. 10.
    The median results from the Reuters survey put Malaysia's
consumption in December at 286,155 tonnes.
Breakdown of December estimates (in tonnes): 
                             Range           Median 
      Production       1,261,000-1,410,000  1,338,107
       Exports         1,260,000-1,400,000  1,319,000
       Imports           50,000-120,000       75,000
   Closing stocks      1,939,000-2,190,000  2,064,000
 * Official stocks of 2,256,048 tonnes in November plus the above
estimated output and imports yield a total December supply of
3,669,155 tonnes. Based on the median of exports and closing
stocks estimate, Malaysia's domestic consumption in December is
estimated to be 286,155 tonnes.

 (Reporting by Mei Mei Chu; Editing by Kim Coghill)