18/10/2011 (Reuters) - Malaysian palm oil futures ended down 1.3 percent on Monday, falling sharply from an earlier three-week high after comments from the German finance minister and also on expectations of a larger U.S. soybean crop for crushing into edible oil.

Palm oil prices, which gained five percent last week, came under pressure along with other commodities after Germany's Finance Minister said European governments would not present an ultimate solution for the debt crisis this week.

"You can't be too bullish in these market conditions," said a trader in futures brokerage in Malaysia.

"Everything is very fluid and the threat of the global economy coming under strain is always at the back of your mind. That also applies to soyoil markets with the higher soy acreage in the U.S," the trader added

Benchmark January palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange rose as much as 1.1 percent to  2,946 ringgit -- the highest since Sept. 27.

The contract then gave up all its gains and more to settle 1.3 percent lower at 2,876 ringgit, with sell orders coming in the last minute.

Export data is expected to strengthen in the coming weeks as mostly Muslim countries and China re-stock after major public holidays and India continues to buy ahead of Diwali at the end of this month.

Cargo surveyor Intertek Testing Services said over the weekend Malaysian exports for Oct. 1-15 rose 11.9 percent to 725,456 tonnes, driven by higher crude palm oil shipments.

Another cargo surveyor, Societe Generale de Surveillance said exports in the same period rose 10.2 percent to 719,575 tonnes.

"The buying of crude palm is going at a steady pace. Overseas buyers are flocking to Malaysia that has a tax free crude palm oil export quota," said another trader in Malaysia.

"Exporting Indonesian crude palm oil is expensive compared to that of refined palm oil and there is some opportunity for Malaysia," he added.

Buyers swooping in to buy Malaysia crude palm oil could cut stocks in the world's second largest producer of the vegetable oil that rose to a 21-month high in September above 2 million tonnes.

But some market players are concerned that production will continue to be strong and boost stocks to at least 2.4 million tonnes at the end of the year -- part of the reason for the decline in the futures market. 

Brent crude turned negative and U.S. crude pared earlier gains on Monday following the German remarks.

Lower crude further weighed on U.S. soyoil for December delivery , which dropped 0.9 percent in Asian trade.

The soy complex has come under pressure after Analytical firm Informa Economics raised its forecast of U.S. 2012 soybean seedings to 77.0 million acres from its previous projection of 75.8 million.

China's most active May 2012 soybean oil contract climbed 0.4 percent on restocking demand after the Golden Week holidays in early October.     

 Palm, soy and crude oil prices at 1032 GMT
                                                                
  Contract                   Month     Last        Change     Low          High      Volume
  M'ASIA PALM OIL    NOV1     2864       -24.00        2864        2917        487
  M'ASIA PALM OIL    DEC1     2872      -34.00        2868        2931        6447
  M'ASIA PALM OIL    JAN2      2876      -39.00        2876        2946       16692
  M'ASIA PALM OIL    FEB2     2890       -38.00        2890       2955         2493
  DALIAN SOY OIL    MAY2     9402       +38.00        9398       9460       347972
  CBOT SOY OIL       DEC1    53.08      -0.46           52.94      53.65       7721
  NYMEX CRUDE     NOV1    87.18      +0.38           86.92      88.18      24796
                                                                
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil in Chinese yuan per tonne
  Crude in U.S. dollars per barrel
  ($1 = 3.127 ringgit)