KUALA LUMPUR/MUMBAI (Reuters) - Malaysia's palm oil stocks fell for a third consecutive month in December to hit their lowest since May 2023, as output dropped due to floods, data from the industry regulator showed on Friday.

The drop in inventories in the world's second-largest palm oil producer after Indonesia could support benchmark futures, which have corrected sharply in recent weeks after rising to their highest in about 2-1/2 years in November.

Malaysia's palm oil stocks at the end of December fell 6.91% from a month earlier to a 19-month low of 1.71 million metric tons, the Malaysian Palm Oil Board (MPOB) data showed.

Crude palm oil production was down 8.3% to 1.49 million tons, the lowest since March 2024, while palm oil exports fell 9.97% to a six-month low of 1.34 million tons.

A Reuters survey had forecast inventories at 1.76 million tons, output at 1.48 million tons and exports at 1.38 million tons. [PALM/POLL]

The MPOB data for December is slightly bullish for the market, as inventories dropped more than forecast due to a rise in local consumption, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.

Malaysia's palm oil consumption jumped 53% in December from a month earlier to 309,865 tons, the data showed.

Palm oil has been trading at a premium to rival soybean and sunflower oils, and it needs to correct to attract demand from price-sensitive buyers, said a Mumbai-based trader with a global trade house.

"Even in January, exports are likely to remain subdued," the trader said.

Following is a breakdown of the Malaysian Palm Oil Board figures and Reuters estimates for December (volumes in tons)[PALM/POLL]:

December December 2024 November December

2024 poll 2024 2023

Output 1,486,786 1,483,000 1,621,294 1,550,796

Stocks 1,708,747 1,755,000 1,835,641* 2,290,793

Exports 1,341,732 1,375,000 1,490,293* 1,362,145

Imports 37,917 22,500 22,081 40,062

*indicates revised figures by the Malaysian Palm Oil Board

(Reporting by Ashley Tang and Rajendra Jadhav; Editing by Martin Petty and Subhranshu Sahu)