Malaysian palm oil futures dropped to their lowest so far this year on Monday, as investors scrambled for the exit on growing global economic fears that also dragged down broader commodities markets.     

Palm oil fell below the key 3,000-ringgit mark for the first time since Dec 2011, with investors bearish due to weak economic data and as the eurozone debt crisis rumbles on.

'Sentiment is bad across all risky assets, for example crude oil. On the demand side, however, palm oil is still positive,' said Alan Lim, research analyst with Kenanga Investment Bank in Malaysia.      

'Palm oil is more on the defensive side because it's used mainly for food, so demand should be sustainable. Investors will be looking closely at the Greece election on June 17, so the market will still be volatile for this week and the next.'     

By the midday break, benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange had slumped 1.8 per cent to 2,951 ringgit ($924) per tonne after going as low as 2,939 ringgit, a level last seen on Nov 3, 2011.     

Traded volumes stood at 15,828 lots of 25 tonnes each, higher than the usual 12,500 lots as investors liquidated positions.     

On the technicals front, Reuters market analyst Wang Tao remained bearish, saying palm oil will fall to 2,830 ringgit per tonne as indicated by its wave pattern and a Fibonacci projection analysis.      

Demand for the edible oil remained firm in May, according to export numbers reported by cargo surveyors.       

The bulk of the orders came from Pakistan and the Middle East where Muslims are getting ready to observe a month of fasting starting in mid July, to be followed by a month of feasting.      

But despite healthy physical demand, a sluggish performance in other global commodity markets weighed on futures prices.         

Brent crude prices fell below $98 a barrel to a 16-month low on Monday, pressured by fears of a global economic slowdown following weak US and Chinese economic data.

In other vegetable oil markets, US soyoil for July delivery lost 1.2 per cent and the most active Jan 2013 soyoil contract on the Dalian commodity exchange lost more than 2 per cent. – Reuters