Palm oil falls as global economic uncertainty grows

Palm oil has lost almost 20 percent so far this year on high stocks and a slowdown in demand, although some traders bet that festival demand in India may see some orders coming in.

"Sentiment is rather weak. Exports are definitely slower in September but India's Diwali festival is coming up and there should be some support from there," said a trader with a foreign commodities brokerage, referring to the Hindu festival on October 26.

Benchmark December palm oil on the Bursa Malaysia Derivatives Exchange settled down 0.94 percent to 3,041 ringgit ($984.38) per tonne.

Overall trade volumes were light, with 14,092 lots of 25 tonnes changing hands, compared to the usual 25,000 lots, as the market was still quiet after a long weekend.

Traders are looking for Sept. 1-20 Malaysian palm oil exports to show a downward trend after a strong August as China and India pause on buying in hopes prices fall further.

The market expects exports during that period to stand at 977,000 tonnes, down 16.5 percent from 1.17 million tonnes in August 1-20.

Brent crude futures fell more $1 a barrel on Monday on a stronger dollar and concerns that Greece's sovereign debt problem may turn into a full-blown banking crisis.

US soyoil for October delivery dropped 1 percent, while the most active May 2012 soybean oil contract on China's Dalian Exchange lost 1.3 percent.

Copyright Reuters, 2011