Palm oil higher on supply fears

Malaysian palm oil futures touched a one-week high on Friday on fears of supply disruptions after rains in producing areas of southern Malaysia and short covering before the end-year holiday.

Dealers said the market was keeping an eye on the weather in southern Malaysia, which was hit this week by its heaviest rains in a century. The resultant flooding forced about 75,000 people to flee their homes, news reports said.

The floods have cut off main roads and disrupted train services in the southern state of Johor, the worst-hit state, which is also a major rubber and palm oil producing region.
Johor is one of Malaysia’s main palm oil producing areas and it is the main supplier for palm oil refineries in southern Malaysia.

“Concern about persistent bad weather which may lead to supply disruption of palm oil supported the market today,” said a trader in Kuala Lumpur.

“If it (bad weather) worsens in the next three days, palm oil will go higher,” he added.

The News