KUALA LUMPUR: Malaysia's palm oil inventories at the end of May are set to fall for a sixth month out of seven, squeezed by declining production and as exports surged to the highest since December, a Reuters survey showed on Friday.

       The stockpile in the world's second-largest producer is pegged to shrink 6% from the month before to 1.54 million tonnes, according to the median estimate of 11 planters, traders and analysts polled by Reuters.

       Production likely slipped 4% to a three-month low of 1.4 million tonnes, due to fewer harvesting days after the Eid al-Fitr holidays to mark the end of the Muslim fasting month.

       Exports are seen leaping 20% to 1.27 million tonnes, the highest in five months, partly helped by a three-week export ban in rival producer Indonesia which had prompted traders to turn to Malaysian palm oil.

       Indonesia had on April 28 banned exports in a bid to secure domestic cooking oil supplies, but has now lifted the ban and is gearing up to resume shipments with a domestic sales ruling in place.

       The world's largest producer as of Friday has issued export permits to 21 companies for a total of 275,454 tonnes of palm oil products since allowing exports to resume, senior Indonesian Trade Ministry official Oke Nurwan said.

       Malaysia's exports are expected to decline in June after a strong showing last month, with increased competition from Indonesia as it re-enters the market further impacting demand, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

       The Malaysian Palm Oil Board will release its data on June 10.

       Breakdown of May estimates (in tonnes): palmm

       *Official stocks of 1,641,994 tonnes in April plus the above estimated output and imports yield a total May supply of 3,105,534 tonnes. Based on the median of exports and closing stocks estimate, Malaysia's domestic consumption in May is estimated to be 297,074 tonnes. - Reuters