SINGAPORE  - Malaysian palm oil futures edged up on Monday, rebounding from the previous session’s 3-week low, although gains were limited by concerns over weak demand and record-high stocks.

Prices on Friday slumped to their lowest since Dec. 21 as official data pointed to record stocks at 2.63 million tonnes in December, going against expectations of a slight drop.  But traders are hoping inventories could soon fall due to the heavy rain now disrupting the harvest of a crop that is expected to decline due to seasonal factors.

“The market is trying to make a comeback on the premise that production dropped over the last 10 days,” said a trader with a foreign commodities brokerage in Malaysia. “However, demand is anaemic and we may have end stocks of around 2.7 million tonnes by end-January.”

The benchmark March contract on the Bursa Malaysia Derivatives Exchange gained just 0.1 per cent to close at 2,370 ringgit ($786) per tonne. Prices dropped to a low of 2,332 ringgit on Friday. Total traded volume stood at 36,146 lots of 25 tonnes each, higher than the usual 25,000 lots. Technical analysis shows palm oil is expected to retest support at 2,334 ringgit per tonne, as a downtrend from the Jan.  2 high of 2,524 ringgit has not been completed, said Reuters market analyst Wang Tao.

Malaysia will set the export tax for crude palm oil at zero per cent in February, flat with January, a government minister said on Monday.

An official announcement is expected on Tuesday.

Traders are awaiting Malaysia’s Jan. 1-15 exports data due to be released on Tuesday after a disappointing showing on the first ten days despite the zero per cent export tax.  Exports fell as much as 34 per cent for the period from a month ago on seasonal factors and tougher Chinese curbs on imported edible oils, cargo surveyor data showed.

Malaysian crude palm oil production this year will rise marginally to 18.9 million tonnes, from 18.8 million tonnes in 2012 as yields improve, an industry regulator said on Monday.

Crude rose above $111 a barrel on Monday as concern about supply resurfaced amid growing optimism over signs that the world’s biggest economies are on their way to a steady recovery.

US soyoil for March delivery edged up 1.3 per cent in late Asian trade. The most active May soybean oil contract on the Dalian Commodity Exchange closed 0.1 per cent lower.