Malaysia Palm Oil output fell 15.7 percent month-on-month to 1.34 million tons in February, according to Malaysian Palm Oil Board (MPOB) data, due to which stockpile also fell in February to the lowest in four months but the smaller than expected decline.
Meanwhile exports fell 13.2% to 1.31 million tons in February despite a jump in shipments to India, the world's largest buyer of Palm Oil.
Inventory fell 2.7% in February to 2.48 million tons from a month earlier due to a sharp fall in output, the MPOB said in a statement.
Production of Palm Oil in Malaysia and Indonesia, which collectively meet nearly 90% of the world's demand, is widely expected to rise in the coming months this year.
Apart from potential global supply increase of up to 4 million tons, analysts have flagged risks to prices in 2018 from rising availability of soybean Palm Oil's main substitute and higher import taxes in India.