"The major factor is still the end stock," said a trader with a foreign commodities brokerage in Malaysia. "The fear is still there - that stocks are not going to draw down further if exports don't pick up the second half of this month." The benchmark March contract on the Bursa Malaysia Derivatives Exchange fell 0.5 percent to close at 2,330 ringgit ($763) per tonne. Prices kept at a tight range of 2,313 - 2,338 ringgit per tonne.
Total traded volumes stood at 25,722 lots of 25 tonnes each, only slightly higher than the usual 25,000 lots, as some investors wound up positions ahead of the year-end. Technical analysis showed palm oil prices remained unchanged at a bearish target of 2,285 ringgit, Reuters market analyst Wang Tao said.
Investors are pinning their hopes on the government's new crude palm oil export tax regime, set at zero for January, to help spur shipments of the grade and cut down record stocks, which hit 2.56 million tonnes in November. "The case in the market is whether export demand can hold up and continue. That's why we are seeing palm oil pricing at such a large discount to other oils," said ANZ agricultural and commodity strategist Victor Thianpiriya in Singapore. In other competing vegetable oil markets, US soyaoil for January delivery edged up 0.4 percent in late Asian trade. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange closed 0.9 percent lower.