Palm oil futures extended their October revival after data showed Malaysia's inventories of the vegetable oil growing more slowly than had been thought, sapped by a pick-up in exports.
Palm oil for December closed up 0.9% at 2,369 ringgit a tonne in Kuala Lumpur, the highest close for a spot contract in more than a month, and taking above 3% gains so far in October.
The rise followed data from the Malaysian Palm Oil Board showing Malaysian inventories ending last month at 1.78m tonnes.
While up 116,000 tonnes month on month, and the highest figure since May, the stocks number was well below the 1.91m-tonne number that the market had expected.
The shortfall reflected in part a weaker-than-expected rise in output what is typically one of the strongest months in Malaysia, the second-ranked palm oil producer and exporter.
Output reached 1.91m tonnes, up 10.2% month on month, but below the growth of some 15% that traders had forecast.
Meanwhile, exports reached 1.61m tonnes, up 5.2% from August, and above the figure of 1.55m tonnes expected by the market.
Shipments have made a strong start to October too, according to separate data from cargo surveyor Intertek, showing shipments up 17% to 542,274 tonnes in the first 10 days.
Nonetheless, some analysts urged investors against overexuberance at the data.
Edward Hugo at VSA Capital said that while the statistics "on the face of it, provide a bullish backdrop for palm oil pricing", values of the vegetable oil are being "primarily" driven by prospects for US production of soybeans, the source of rival soyoil.
While the US was still set for a bumper crop, "concerns over harvesting delays in key US soybean states due to rainfall have provided a more bullish backdrop for soybean and palm oil prices in recent days".
Price pressure ahead
At Singapore-based Phillip Futures, analyst Tan Chee Tat said that while Thursday's data may give a "short-term boost" to palm oil prices, he remained "bearish" over longer-term prospects.
"Rising stockpiles are likely to remain a concern in the upcoming months due to strong production in the high production cycle," Mr Tan told Agrimoney.com.
"Secondly, we are likely to experience slowing export growth in palm oil due to lack of festive seasons ahead to provide a short-term boost in demand."
Indeed, major palm consuming countries "are likely to cut on demand", he said, flagging a potential slowdown in China's economy, and the impact of a weakening rupee in reducing the affordability to India of imports.