Bloomberg reports, “Palm oil and rubber advanced as flooding in Malaysia and Thailand disrupted supplies from Southeast Asia, and forecasters said that further heavy rain over the next few days will probably exacerbate the situation. Palm oil for March delivery jumped 1.6 percent to 2,286 ringgit ($654) a metric ton on Bursa Malaysia Derivatives, the highest closing price for a most-active contract since Nov. 4.
The benchmark price for the edible oil rose for an eighth day, the longest rally since 2010. Rubber climbed for a third day on the Tokyo Commodity Exchange and traded near a four-month high. Malaysia evacuated more than 200,000 people as the worst flooding in decades left at least 10 people dead, with Transport Minister Liow Tiong Lai warning today that citizens in the largest palm oil producer after Indonesia must prepare for the worst. Rubber output in Thailand, the biggest supplier, and Malaysia will drop at least 30 percent because of the floods and prices are poised to rise further, according to Yium Tavarolit, chief executive officer of the International Rubber Consortium.
Palm oil “production may see a sharp decline this month because of the floods,” said Gnanasekar Thiagarajan, head of trading at Kaleesuwari Intercontinental Singapore Pte. The flood concerns may help prices extend gains, overriding factors such as lower crude oil prices and a possible drop in Indian demand because of increased import taxes, Gnanasekar said today.