Reuters also reported that Malaysian palm oil was flat on Monday as traders awaited clearer signals on whether prices would extend last week's fall to near five year lows, pushing the market into oversold territory.
By Monday's close, the benchmark August contract on the Bursa Malaysia Derivatives Exchange had inched down 0.29 percent to 2,087 ringgit ($661) per tonne.
"This is very reflective of the indecisiveness that the market has," said a trader with foreign commodities brokerage in Kuala Lumpur.
"The market does not want to go down from here because the fundamentals do not warrant, but cannot go higher unless there's a sign of increased demand," the trader said.
Prices of palm oil, the world's most traded vegetable oil, fell 6.2 percent last week, notching their biggest weekly drop since March 2013, dragged down by projections of abundant supplies of soybeans.
Palm typically tracks soyoil, a rival edible oil and common food and fuel substitute. Soy markets are facing pressure over forecasts of a bountiful soybean crop from top exporter the United States.
Traders said the market was now heavily oversold.
One trader described the relative strength index reading for Malaysian palm oil prices as "way beyond belief. Normally it becomes oversold when it is 30, or lower than 30. This market is very heavily oversold ... you don't get to see this very often. It looks like prices should recover very quickly."
Declining US soyoil prices could only impact palm prices to a certain point, beyond which palm becomes more attractive, one trader said.
He said he expected to see an increase in palm prices over the next two months.
"The world still has to live with palm oil for their fat needs. Technically (soy oil prices) are coming off and they are putting pressure on our side, but if you see the differential between palm olein and soybean oil, we are back to about $100, which fundamentally doesn't bode well for soybean oil."
"The market is looking for a new lead to see if prices will decline further," the trader said, noting that participants would be monitoring the performance of soybean oil trade on the Dalian Commodities Exchange.
"The market will start recovering when people see signs of exports growing and demand there," another trader said.
Total traded volume on Monday stood at 39,948 lots of 25 tonnes, above the average 35,000 lots.
Technical charts showed palm oil prices may fall to 2,046 ringgit per tonne, after breaking below support at 2,094 ringgit, said Reuters market analyst Wang Tao.
In other markets, Brent crude fell more than $1 to trade below $102.5 a barrel on Monday, as the threat of wider conflict in Ukraine diminished, oil output increased in Libya and worries eased over supply from key producer Iraq.
In other competing vegetable oil markets, the U.S. soyoil contract for August remained steady, slipping 0.06 percent in early Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange fell 1.35 percent.- Reuters
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