Lost UDP fragments
 

On my PC I have an issue related to UDP: when snmp bulk request comes and response size is larger than MTU (1500), UDP packet fragmented but only the first part is sent to network. I get a traffic dump on the PC and see the only the first fragment is transmitted. It looks like other parts of UDP packet is dropped by network stack/kernel. OS is Linux. Both hosts are in the same subnet.

What can be wrong? Network settings, kernel settings, user space, etc?

UDP is designed for small packets. Services that require larger packets should either use TCP or have a mechanism to switch from UDP to TCP for larger packets. BIND DNS originally was UDP only but as more and more detail including DNSSEC began being used they had to modify it to do the switch for UDP to TCP.

It may be whatever you're doing allows such switching but you've only opened UDP in whatever firewall you're using (e.g. iptables or firewalld). You have to open the same port both for UDP and TCP, usually in separate rules (e.g. for BIND DNS).