07/02/2013 (Reuters) - Malaysian palm oil futures edged up on Thursday, as investors expect a marginal drop in January stocks, although cautious sentiment ahead of the upcoming long holiday capped gains.

Lower production is likely to have helped Malaysian palm oil stocks ease in January from a record high in the previous month, a Reuters survey of five plantation companies showed on Thursday.

Inventory levels most likely dropped 2.9 percent to 2.55 million tonnes in January from December's all-time high, the first decline since last June, according to the survey.

Stronger export demand seen in the last week of January may have helped cut stocks and the trend could persist, given palm oil's attractive discount to soybean oil and as worries eased over China's stricter quality regulation.       

"Stocks are expected to drop, due to exports picking up towards end-January," said a dealer with a foreign commodities brokerage in Malaysia.

At the close, the benchmark April contract on the Bursa Malaysia Derivatives Exchange had gained 0.2 percent to 2,552 ringgit ($826) per tonne. Prices were rangebound between 2,530 and 2,567 ringgit. 

Total traded volumes stood at 30,443 lots of 25 tonnes each, higher than the average 25,000 tonnes.

Technical analysis shows palm oil is expected to fall to 2,510 ringgit per tonne, as indicated by its wave pattern and a Fibonacci retracement analysis, said Reuters market analyst Wang Tao.

The Malaysian financial markets will be closed next Monday and Tuesday for the Lunar New Year holiday. Industry regulator the Malaysian Palm Oil Board will release January inventory and output data after the market resumes trading on Wednesday.

Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will issue export data for Feb. 1-10 also on Wednesday.    

The market will be looking for trading direction from  Friday's U.S. Department of Agriculture monthly supply and demand reports, which may be bullish for palm oil due to  tighter soybean stocks.

In other markets, oil rose above $117 a barrel on Thursday as traders awaited word from the European Central Bank that could confirm speculation the region's troubled economy was turning a corner.

In competing vegetable oil markets, U.S. soyoil for March delivery eased 0.5 percent in late Asian trade. The most active September soybean oil contract on the Dalian Commodity Exchange hit a one-week low.        

  Palm, soy and crude oil prices at 1004 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      FEB3    2470    +1.00    2470    2490      85
  MY PALM OIL      MAR3    2529    +5.00    2508    2540    2875
  MY PALM OIL      APR3    2552    +5.00    2530    2567   16892
  CHINA PALM OLEIN SEP3    7116   -38.00    7078    7146  334800
  CHINA SOYOIL     SEP3    8764   -60.00    8718    8806  307848
  CBOT SOY OIL     MAR3   52.20    -0.25   52.13   52.56    5883
  NYMEX CRUDE      MAR3   96.84    +0.22   96.44   96.94   12362

  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=3.091 ringgit)