23/03/2012 (Reuters) - Malaysian palm oil futures dropped to their lowest in nine days on Thursday as China's factory activity fell, renewing concerns over global economic growth and commodity demand.

Losses were limited compared to markets such as crude oil, as palm oil traders were betting export data due next week would show strong demand from Europea and India.

But news of China's industrial activity dropping in March, with new orders sinking to a four-month low, could see investors slam on the brakes further on palm oil's rally of last week.

The rally lost some steam this week in choppy trade as investors feared the market had gone up too high, too fast. Malaysian palm oil futures have gained 5.2 percent this year.

"Now there is this new concern about uncertain economic growth after the China data came out. But I am confident this is a kneejerk reaction and the market will go up again," said a trader with a foreign commodities brokerage in Kuala Lumpur.

Benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange ended down 0.8 percent at 3,342 ringgit ($1,100) per tonne after falling as low as 3,334 ringgit -- the lowest since March 13.

Traded volumes stood at 26,589 lots of 25 tonnes each, higher than the usual 25,000 lots.

Reuters market analyst Wang Tao said signals were mixed for palm oil as it continues to hover above support at 3,343 ringgit per tonne.

Malaysian exports jumped 14 percent for the first 20 days of March from a month ago, according to cargo surveyors, and traders are expecting the trend to continue when data for March 1-25 is released on Monday.

"There has been good buying interest from Europe and India. It will continue for this month," said another trader.

Brent crude dropped below $124 a barrel on Thursday, after weak Chinese manufacturing data sparked concerns that energy demand growth could slow in the world's second-largest oil consumer.

Edible oils are increasingly used to produce biodiesel, which competes with crude oil.

In other vegetable oil markets, the most active U.S. soyoil contract for May delivery dropped 0.6 percent in Asian trade. The most active September 2012 soyoil contract on China's Dalian Commodity exchange fell 0.2 percent.  
     
  Palm, soy and crude oil prices at 1011 GMT
                                                                           
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      APR2    3367    +0.00    3355    3368     172
  MY PALM OIL      MAY2    3346   -28.00    3337    3382    4088
  MY PALM OIL      JUN2    3342   -26.00    3334    3383   15677
  CHINA PALM OLEIN SEP2    8508   -24.00    8506    8594  167466
  CHINA SOYOIL     SEP2    9532   -16.00    9526    9600  492852
  CBOT SOY OIL     MAY2   54.03    -0.35   53.98   54.68    8868
  NYMEX CRUDE      MAY2  106.04    -1.23  105.67  107.12   20329
                                                                           
  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
 ($1=3.0740 Malaysian ringgit)