Malaysia Floods Push Up Rubber, Palm Oil

Rubber entered a bull market and palm oil headed for the longest run of gains in more than a decade as flooding across Malaysia and parts of Thailand hurt supplies of both commodities and forecasters predicted more rain.

Rubber for June delivery rallied 3.9 percent to 213.3 yen a kilogram ($1,773 a metric ton) on the Tokyo Commodity Exchange, the highest settlement since July 3. Futures rose 22 percent from a five-year low in October, meeting the threshold for a bull market with a gain of at least 20 percent. Palm oil climbed for a ninth day in Kuala Lumpur to head for the longest run of gains since 2002.

Heavy rains flooded parts of Malaysia and southern Thailand over the past two weeks, and Commodity Weather Group predicted the falls will continue for at least another week. Malaysia evacuated more than 200,000 people as of 29 December amid the worst flooding in decades.

Thailand is the world’s largest rubber exporter and neighbour Malaysia is the biggest shipper of palm oil after Indonesia, where some rubber exporters are in talks with buyers to reschedule shipments because of rains.

Palm oil for March delivery rose as much as 0.8 percent to 2,305 ringgit ($657) a metric ton on Bursa Malaysia Derivatives and traded at 2,290 ringgit. The commodity climbed to 2,308, the highest level since Nov. 4.

Rubber futures rose 16 percent this quarter, the first advance since 2013, after Thailand, Indonesia and Malaysia took steps to shore up prices from the five-year low in October. Producer groups from the top suppliers pledged to refrain from selling below $1.50 a kilogram. Three nations also agreed to cut exports from next year to drain supplies.

In Malaysia, monsoon rains with strong winds are seen over Pahang, Perlis, Kedah, northern Perak, Kelantan, central and northern Terengganu, western Johor and Sabah, and are expected to continue until tomorrow, the Malaysian Meteorological Department said on its website. All the states listed are in Peninsula Malaysia apart from Sabah, which is in Borneo.

The flood-induced rally puts palm oil futures on course for the first quarterly advance since the final three months of 2013. Prices climbed 3.3 percent since the end of September, paring their decline this year to about 14 percent.