20/12/2012 (Reuters) - Malaysian palm oil futures inched lower for a second day on Wednesday as sluggish exports in the first half of the month fan concerns that stockpiles in the world's No.2 producer could hit another record high.

Weaker demand from top food consumers China and India early this month have traders worried that seasonally slowing output might not be enough to cut inventory levels, weighing on prices that have lost almost 27 percent this year.

Demand might have tapered off as palm oil tends to solidify in the northern hemisphere's current winter season, prompting buyers switch to competing soy oil, which has a lower freezing point.

"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.

"We don't see the potential for a dramatic pick up in prices until early next year, and that's only if export demand continues to be strong."

Brent oil rose above $109 a barrel on Wednesday on expectations that a budget crisis in the United States will be resolved, saving the world's top oil consumer from slipping into recession.

In other competing vegetable oil markets, U.S. soyoil 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. 

  Palm, soy and crude oil prices at 1004 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JAN3    2190    -7.00    2176    2200     400
  MY PALM OIL      FEB3    2268    -9.00    2250    2274    3592
  MY PALM OIL      MAR3    2330   -12.00    2313    2338   10466
  CHINA PALM OLEIN MAY3    6772   -54.00    6728    6788  403098
  CHINA SOYOIL     MAY3    8724   -76.00    8672    8754  484828
  CBOT SOY OIL     JAN3   49.34    +0.17   49.13   49.49    5076
  NYMEX CRUDE      JAN3   88.28    +0.35   87.81   88.28     938
                                                                                               
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  Crude in U.S. dollars per barrel
  ($1=3.05 Malaysian ringgit