They said expectations of higher Indonesian exports and palm oil's already stiff premium to other competing oils are weighing on local prices.

"Overall, there is still room for the market to come down," said SK Choo, marketing manager of palm oil refiner Josovina Sdn Bhd.

"But it needs to have a brief (upward) correction first before falling further. I think the down trend is still intact," he told Reuters.

Malaysia's crude palm oil futures, basis April, tumbled to 1,952 ringgit a tonne on Tuesday -- the lowest level since December 1997. Prices stood at 1,958 ringgit a tonne on Wednesday.

"We feel the market will remain weak. There is no bullish news to reverse the trend," said another trader.

Technically, analysts saw key support at 1,950 ringgit.

"If it breaks the 1,950 level, then the trend is all the way down," said a commissionhouse trader.

Analysts had earlier projected a price range of between 1,850 ringgit and 2,250 ringgit a tonne in 1999.

Market sentiment was dented by prospects of a cut in Indonesia's crude palm oil (CPO) export duty. Indonesia is the world's largest palm oil producer after Malaysia.

"Indonesia is soon going to release the export tax cut and this will put more pressure on our local prices," one of the traders said. "It will be more competitive if Indonesia reduces its export duty."

Indonesia is set to announce the country's CPO and its by-products export duty later this month.

Indonesian Trade and Industry Minister Rahardi Ramelan said on Wednesday the new export taxes will be effective on February 1 instead of February 8.

Ramelan said he changed the date after seeing the market's reaction to his recommendation on Monday that the CPO export tax be cut to 40 per cent from 60 per cent.

Currently taxes on CPO by-products such as refined, bleached, deodorised palm oil and olein are 55 per cent, and50 per cent for crude palm kernel oil.

Traders also said the prevailing high premium of Malaysian palm oil over major soft oils had hurt demand.

Malaysia's refined palm olein commands a premium of $70-$90 a tonne over refined soyoil and $110-$130 over crude degummed soybean oil.

Its premium over sunflower oil is currently pegged at $85 a tonne.