RTRS-UPDATE 1-Malaysian palm stocks drops to 20-mth low-MPOB

KUALA LUMPUR, April 10 - Malaysian crude palm oil inventories fell 12.89 percent to a 20-month low in March as strong domestic and foreign consumption outstripped a rise in output, industry data showed on Friday.

The Malaysian Palm Oil Board said stocks slid to 1,363,657 tonnes, confirming fears of a supply squeeze that has prompted traders to scramble for positions in the last few days.

The figure, the lowest since July 2007, was in line with a forecast 12.8 percent fall to 1,362,000 tonnes in a Reuters poll.

Palm oil output in March was up 7.44 percent at 1,275,736 tonnes while shipments edged up 0.23 percent 1,260,380 tonnes. Traders say domestic consumption for March would have been about 200,000 tonnes as more Malaysians switch to cheaper palm oil as a cooking oil.