* Futures hit 2,577 ringgit, level last seen on Sept. 2010 * Prices trading 17 pct lower so far in 2012 * Bearish views by top vegetable oil analysts weigh on sentiment * Coming Up: Malaysia's Sept. 1-25 exports on Tuesday (Updates prices) By Chew Yee Kiat SINGAPORE, Sept 24 (Reuters) - Malaysian palm oil futures tumbled on Monday to their lowest in two years, hurt by rising inventories and steep losses in U.S. soybeans on expectations of higher output. Bearish views by industry analysts at a vegetable oil conference also weighed on palm oil prices, which are trading almost 17 percent down since the start of the year, in their worst performance since 2008. The benchmark December contract on the Bursa Malaysia Derivatives Exchange lost 4.2 percent to close at 2,646 ringgit ($862) per tonne, recovering from an intraday low at 2,577 ringgit, a level unseen since September 2010. Total traded volumes stood at 43,373 lots of 25 tonnes each, much higher than the usual 25,000 lots. "Prices have come to a two-year low, it's not something that's surprising. In the month of September and October, we see a higher inventory, and it's something of a seasonality factor," said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore. "Last year we saw a year-low on Oct. 6, so we are quite close to that." Palm oil prices will fall further this year as slowing economic growth reins in demand for biofuel, leading to higher stocks in top producers Indonesia and Malaysia, key industry officials concluded on Sunday at the Globoil Conference in Mumbai. Prices could drop to 2,600 ringgit-2,700 ringgit per tonne by the end of this year, top analyst Dorab Mistry, head of edible oil trading with Indian conglomerate Godrej Industries told the meeting. James Fry, chairman of commodities consultancy LMC International, also told the conference prices may drop to 2,575 ringgit per tonne in the last quarter of 2012 from current levels if Brent crude oil prices come down to $95 per barrel. Palm oil stocks in No.2 producer Malaysia stood at a 10-month high of 2.1 million tonnes in August, and traders said stocks could climb higher in September on strong production. Malaysian palm oil exports rose almost 15 percent for Sept. 1-20 from a month ago, according to cargo surveyor data. Demand for the edible oil could go higher on bargain hunting as prices hit new low, traders said. Cargo surveyors Intertek Testing and Societe Generale de Surveillance will issue exports data for Sept. 1-25 on Tuesday. Other vegetable oil markets also suffered steep losses on rising U.S. soybean output and unfavourable economic sentiment. By 1004 GMT, U.S. soyoil for December delivery had lost 1.8 percent. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 2.7 percent down after touching the lowest level since Aug. 6. Palm oil can be used as a substitute for soyoil. Chicago soybeans slid almost 2 percent to fall below $16 a bushel for the first time since mid-August on expectations of higher U.S. output and slowing Chinese demand. Palm, soy and crude oil prices at 1005 GMT Contract Month Last Change Low High Volume MY PALM OIL OCT2 2512 -81.00 2400 2512 387 MY PALM OIL NOV2 2578 -115.00 2508 2596 5011 MY PALM OIL DEC2 2646 -117.00 2577 2695 27094 CHINA PALM OLEIN JAN3 7350 -306.00 7350 7550 390494 CHINA SOYOIL JAN3 9498 -264.00 9394 9680 1037548 CBOT SOY OIL DEC2 53.86 -0.97 53.32 55.07 15152 NYMEX CRUDE NOV2 91.51 -1.38 91.34 93.18 29994 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

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