KUALA LUMPUR (Oct 12): Malaysia's September palm oil inventory rose at a slower pace of 5.46% on month to 2.63 million tonnes as exports grew amid crude palm oil (CPO) output decline.

In a statement today, Malaysian Palm Oil Board (MPOB) said exports of palm oil, comprising CPO and processed palm oil, grew 4.36% to 1.68 million tonnes. CPO output declined 4.48% to 1.96 million tonnes.

In August, CPO output rose 12.96% on month while palm oil inventory climbed 10.36%. Palm oil exports fell 0.12%.

In September, MPOB said CPO production declined on lower output in Peninsular Malaysia and Sabah.

MPOB said Peninsular Malaysia and Sabah's CPO output declined 8.15% and 1.36% respectively. Sarawak's CPO production, however, rose 1.68%.

Speakers at the recent MPOB International Palm Oil Congress and Exhibition had indicated that Malaysian and Indonesian palm oil yield was a challenge for the industry in the region.

CIMB Investment Bank Bhd highlighted the issue in a note.

"Dr. James Fry from LMC pointed out in his presentation that his study revealed that palm oil yields in Malaysia and Indonesia seem to have reached a plateau, whereas soybean yields have been rising in major production regions.

"Palm oil, on the other hand, is facing rising input costs, due to higher wages in South East Asia," CIMB wrote.