KUALA LUMPUR (June 11): Shares in Sime Darby Plantation Bhd rose as much as 6% or 24 sen in the morning trading session today, after the industry regulator said Malaysia's palm oil stockpile declined for the fifth consecutive month in May 2018.

At 3.34pm, the stock was trading at RM5.40, still up 17 sen or 3.25% from its last closing price of RM5.23. A total of 1.51 million shares were exchanged so far, valuing it at a market capitalisation of RM37.07 billion.

Official data released today by the Malaysian Palm Oil Board (MPOB) showed Malaysia's palm oil inventory declining 0.51% to 2.17 million tonnes in May 2018, from 2.18 million tonnes in April, as production declined in Peninsular Malaysia, and Sabah offset gains in Sarawak.

A decline in stockpile generally lends near-term support to crude palm oil (CPO) prices, as a lower inventory is a reflection of demand exceeding supply.

However, monthly CPO production for the month declined 2.1% to 1.53 million tonnes, from 1.56 million tonnes in April, according to MPOB.

Owner of online published Palm Oil Analytics, Sathia Varqa, said the production fall in May was "expected but unseasonable", as this would be the first fall in the month of May since 1995.

"The production fall is seen as temporary but will only partly dissipate in June. We expect to see modest production rise in June, given lingering [effects] of Ramadan and Eid festive holidays," he added.

As at 2.25pm, the benchmark palm oil third-month contract for August 2018 was traded RM4 or 0.17% lower at RM2,362.