Stockpiles rose 8% from August to 2.27 million tonnes, the highest since October 2019, according to the median estimate of nine traders and analysts polled by Reuters.
Output in the world's second-largest producer rose for a fourth consecutive month. It grew 2% to 1.76 million tonnes.
Exports rose 8% to 1.41 million tonnes as top buyer India stocked up on the edible oil ahead of the Diwali festival in October.
India's imports of palm oil jumped in September to their highest in a year, boosted by strong demand for the tropical oil ahead of the festival season and a steep discount compared to rival oils.
Demand for palm oil has been subdued as tough COVID-19 restrictions and intermittent lockdowns in key importer China hurt consumption levels, weighing on the benchmark futures contract.
Investors will watch for any announcement on an easing of China's zero-COVID policy during its ruling Communist Party's national congress beginning Oct. 16, a Kuala Lumpur-based analyst said.
"When the country starts to revert to a new post-COVID normal, demand can be expected to pick up," the analyst said.
Indonesia, the world's biggest producer of palm oil, may extend an export levy waiver on the edible oil to the end of this year. Cheaper Indonesian exports may draw demand away from Malaysia.
The Malaysian Palm Oil Board (MPOB) is scheduled to release its data on Oct. 11.
Breakdown of September estimates (in tonnes):
Range Median
Production 1,725,781-1,780,000 1,760,000
Exports 1,320,000-1,494,600 1,410,000
Imports 75,000-150,000 102,000
Closing stocks 2,158,600-2,384,641 2,265,000
* Official stocks of 2,094,667 tonnes in August plus the above estimated output and imports yield a total September supply of 3,956,667 tonnes. Based on the median of exports and closing stocks estimate, Malaysia's domestic consumption in September is estimated to be 281,667 tonnes.
(Reporting by Mei Mei Chu; Editing by Kanupriya Kapoor)
By Mei Mei Chu
