The market also declined ahead of official data from the Malaysian Palm Oil Board, which is forecasting stockpiles rising to their highest in over two years.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange fell 1.1 percent to 2,597 ringgit ($648.12) a tonne at the close of trade, its sharpest daily drop in almost three weeks.
Earlier in the session, it had risen to its highest since Nov. 24 at 2,635 ringgit a tonne on stronger demand expectations and a weaker ringgit, palm’s currency of trade, which typically makes the oil cheaper for foreign buyers and spurs demand.
Trading volumes stood at 45,069 lots of 25 tonnes each at the end of the trading day.
“The market weakened on rumours that exports (from Jan. 1-10) will come in flat or lower (than the corresponding period last month),” said a trader from Kuala Lumpur.
Cargo surveyors are expected to release Malaysian palm oil shipment data after 0300 GMT on Wednesday.
Official data for December stockpiles, production and exports from the Malaysian Palm Oil Board is also scheduled for release after 0430 GMT on Wednesday.
In other related edible oils, the March soybean oil contract on the Chicago Board of Trade dropped 0.2 percent, while the May soybean oil on the Dalian Commodity Exchange was up 0.3 percent.
The Dalian January palm oil contract gained 0.8 percent.
Palm oil prices track the performance of other edible oils, as they compete for a share in the global vegetable oils market.