KUALA LUMPUR - Malaysia's palm oil stocks at the end of August rose marginally, but missed market expectations as imports slumped and domestic consumption picked up, official data showed on Thursday.

Palm oil inventories in the world's second-largest producer increased 0.06% from the previous month to 1.7 million tonnes, marking the first monthly gain since April, according to data from industry regulator the Malaysian Palm Oil Board (MPOB). 

The rise was lower than a Reuters' survey pegging a 5.4% increase, and may provide further support to the benchmark palm oil futures contract, which has gained 3% so far this month.

August imports were at a 27-month low and contributed to the smaller stockpiles, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

Imports fell 39% from July to 32,311 tonnes, while domestic consumption rose 12.6% to 312,591 million tonnes.

Crude palm oil output rose 3.07% to a two-month high of 1.86 million tonnes, as plantations entered the seasonal peak production period. 

"Production is now slowly recovering at both Malaysia and Indonesia," said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.

Exports slumped 11.3% to 1.58 million tonnes, the lowest since May, as top buyers India and Europe reduced purchases. 

Shipments to India, the world's largest edible oil consumer, fell 27%, while those to Europe declined 7%.

Meanwhile, cargo surveyors estimated exports during the first 10 days of September jumped 10% from a month earlier. 

"With September exports emerging positive... prices could see a recovery to 2,900 ringgit for the most active contract," Varqa said.

The market will now wait for September production numbers for further price direction, said a Kuala Lumpur-based trader.

Following is a breakdown of the Malaysian Palm Oil Board figures and Reuters estimates for August (volumes in tonnes):

Aug. 2020 Aug. 2020 poll July 2020* Aug 2019 Output 1,862,962 1,843,903 1,807,397 1,821,548 Stocks 1,699,106 1,790,000 1,698,036 2,240,523 Exports 1,581,612 1,533,000 1,783,284 1,735,645 Imports 32,311 50,000 52,691 51,055 *indicates revised figures by the Malaysian Palm Oil Board

(Reporting by Mei Mei Chu; Editing by Jacqueline Wong and Subhranshu Sahu) ((meifong.chu@thomsonreuters.com; +603-2333-8035; Reuters Messaging: @meixchu on Twitter))