KUALA LUMPUR: Malaysian palm oil futures rose for a third straight day on Monday, closing at its highest in 10 days on hopes of better demand in September, even as expectations of an increase in stocks and production capped gains.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange rose 20 ringgit, or 0.46%, to 4,330 ringgit ($1,044.38) a tonne.

It earlier hit an intraday high of 1.8%.

Malaysia's end-August palm oil inventories jumped 16.3% from July to 1.74 million tonnes, its highest in over a year, according to a Reuters survey on Friday.

Production rose 11.2% to 1.7 million tonnes, while exports slumped 12.3% to 1.24 million tonnes, the survey showed.

Palm oil falls tracking rival oils, logs 1.5% weekly climb

The projected jump in inventories is sharper than historical trends of a 3% rise in August, but still far below the historical average of 2 million tonnes, Ivy Ng, regional head of plantations research at CGS-CIMB Research, said.

"We think the slump in exports in August may be temporary due to the upcoming mooncake and Diwali festivals."

The market is awaiting the Malaysian Palm Oil Board to release August supply and demand data on Sept. 10.

Malaysia, the world's second-largest producer of palm oil, is facing a perfect storm of production headwinds that will likely drag global stocks to their lowest level in five years.

Crude palm oil prices are projected to remain firm at 3,500-4,000 ringgit a tonne in September, Ng said.

Dalian's most-active soyoil contract rose 1.3%, while its palm oil contract was up 2%. The Chicago Board of Trade was closed for a public holiday.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.