"We view the latest inventory data negatively as high stocks should keep crude palm oil prices at distressed levels of below 2,500 ringgit per tonne for an extended period well into 2013," Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank, said in a note to clients.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange lost 0.9 percent to close at 2,292 ringgit ($750) per tonne. Prices traded in a range of 2,283 to 2,324 ringgit. Total traded volumes stood at 38,386 lots of 25 tonnes each, much higher than the usual 25,000 lots.
On the weather front, an absence of El Nino disrupting production could lead to even higher palm oil supplies and pile more pressure on record high stocks, while the latest export data also failed to lift investor sentiment. Malaysian exports fell 2.8 percent for the first 10 days of December from a month ago, said cargo surveyor Intertek Testing Services. Another cargo surveyor, Societe Generale de Surveillance, reported a 0.4 percent rise for the same period. In other vegetable oil markets, US soyaoil for January delivery fell 0.3 percent in late Asian trade. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange closed 0.1 percent lower.