Investors are reluctant to place aggressive bets ahead of a crop report by the U.S. Department of Agriculture due later in the day.
The benchmark February contract at Bursa Malaysia Derivatives ended 0.9% lower at 2,292 ringgit a metric ton after moving in a MYR2,283-MYR2,324 range.
Palm oil is unlikely to rise higher, analysts said, because stocks rose to a record 2.56 million metric tons at the end of November, according to a Dec. 10 report by industry regulator the Malaysian Palm Oil Board.
Any price upside is likely to be capped, "until palm-oil stocks fall to around 2 million tons," CIMB Research said in a note.
December stockpiles could ease toward 2.54 million tons, as a seasonal fall in production may outpace export demand, CIMB Research said.
"We expect output to fall 10% from the previous month to December, while export demand will probably drop only 2% as the attractive [CPO] price and China's new regulation on quality may prompt consumers to restock," it added.
Malaysia vegetable-oils exporters are expected to move more palm oil before a tax-free export quota expires at the end of the year.
In the cash market, refined palm olein for December was offered at $765/ton, while cash CPO was offered at MYR2,070/ton.
Open interest on the BMD was 156,441 lots, versus 153,392 lots Monday. One lot is equivalent to 25 tons.
A total of 38,386 lots of CPO were traded versus 35,330 lots Monday.
Ending BMD CPO futures prices in MYR/ton: Month Close Previous Change High Low Dec'12 2,087 2,121 -34 2,110 2,105 Jan'13 2,187 2,221 -34 2,230 2,185 Feb'13 2,291 2,313 -22 2,324 2,283 Mar'13 2,365 2,377 -12 2,391 2,360