* Prices drop to 2,497 rgt in early trade, lowest since Oct. 29 * Jan 1-10 palm exports plunge 22 pct m/m -cargo surveyors * Malaysia's end-Dec palm stocks rise to 1.99 mln T -MPOB * Indonesian biodiesel policy seen taking off -analyst By Anuradha Raghu KUALA LUMPUR, Jan 13 (Reuters) - Malaysian palm oil futures fell to their lowest in more than two months on Monday, stretching their losing streak to an eighth session as concerns of higher stocks amid sluggish export demand continued to weigh on investor sentiment. Malaysian end-stocks rose to 1.99 million tonnes in December from a month earlier, the Malaysian Palm Oil Board said on Friday, hitting their highest in nine months as lacklustre demand offset a fall in output caused by monsoon floods. Market players had expected inventories to fall to 1.96 million tonnes. Weaker-than-expected exports in the Jan. 1-10 period also dragged on benchmark prices. Cargo surveyors reported that Malaysian palm exports plunged 22 percent from a month ago as crude palm oil shipments slowed and buyers from India, Europe and Pakistan cut back purchases. "There's no incentive for prices to move higher. They are still stuck in a range - trading between 2,480 and 2,550 ringgit," said a trader with a foreign commodities brokerage. "Exports were bad... but maybe they will improve later in the month," the trader added. By the midday break, the benchmark March contract on the Bursa Malaysia Derivatives Exchange had edged down 0.3 percent at 2,509 ringgit ($770) per tonne. Prices had dropped to 2,497 ringgit in early trade, their lowest since Oct. 29. Total traded volume stood at 7,912 lots of 25 tonnes, smaller than the usual 12,500 lots. Technicals showed Malaysian palm oil is expected to rebound to 2,555 ringgit per tonne as it has completed a five-wave cycle, Reuters market analyst Wang Tao said. A stronger ringgit also curbed buying interest from overseas buyers and refiners. The Malaysian ringgit rose 0.35 percent to 3.2570 against the dollar on Monday, making the ringgit-priced feedstock more expensive. Analysts said lower Malaysian imports of palm oil from neighbouring Indonesia signalled that the top producer is serious in carrying out its new policy of requiring a higher percentage of palm oil in its biodiesel blend, and will support prices in the long term. "Note that in December 2013, Malaysia's palm oil imports from Indonesia remained very low at 24,574 metric tonnes or 72 percent lower year-on-year," said Alan Lim, an analyst with Kenanga Investment Bank. "We reckon that this is a sign that Indonesia is committed to implementing its biodiesel plan, which spurred higher domestic palm oil usage, thus curbing its export and lessening the export competition with Malaysia," Lim said. "In the long run, this is positive to crude palm prices and benefits both countries." In other markets, Brent crude edged lower toward $107 a barrel after six nations struck a fresh six-month deal with Iran to curb its nuclear programme and U.S. President Barack Obama urged Congress not to impose additional sanctions on the country. In competing vegetable oil markets, the U.S. soyoil contract for March fell 0.5 percent in early Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange dropped 0.6 percent. Palm, soy and crude oil prices at 0531 GMT Contract Month Last Change Low High Volume MY PALM OIL JAN4 0 +0.00 0 0 0 MY PALM OIL FEB4 2491 -8.00 2488 2510 437 MY PALM OIL MAR4 2509 -8.00 2497 2531 4603 CHINA PALM OLEIN MAY4 5800 -52.00 5792 5874 441212 CHINA SOYOIL MAY4 6620 -42.00 6618 6688 327036 CBOT SOY OIL MAR4 38.03 -0.20 38.01 38.23 1643 NYMEX CRUDE FEB4 92.35 -0.37 92.31 92.88 5616 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

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