16/01/2015 (Daily Times) - Malaysian palm oil futures rose on Thursday after a recent climb in crude oil, with prices underpinned by concerns over a squeeze in the tropical oil’s supply as the No.2 grower braces for monsoon rains over the Borneo region.

Growers in Peninsular Malaysia are facing the aftermath of the worst monsoon floods in decades which destroyed palm oil transportation and processing infrastructure in the worst-hit states, making worse the weakness in palm yields already low due to seasonal reasons.

Malaysia’s meteorological department indicates that the monsoon has now shifted to Borneo, bringing rains to top palm-growing states Sabah and Sarawak. The department warned of heavy rains over Sarawak that are expected to last until Saturday, while thunderstorms and strong winds are seen hitting Sabah late Thursday.

“Prices are generally being supported because of tightness in nearby oil,” said Chandran Sinnasamy, a trader at LT International Futures in Malaysia. “Even though demand is not good, people want to wait and see whether January’s production is within expectations, or worse.”

The benchmark March contract rose 1.0 percent to 2,367 ringgit ($665) per tonne by Thursday’s close. Total traded volume stood at 66,704 lots of 25 tonnes, above the usual 35,000 lots.

Exports of Malaysian palm products fell 13 percent to 535,651 tonnes in the first half of January compared to a month ago, cargo surveyor Intertek Testing Services reported, on weaker shipments to top buyers China, India and Europe. Another surveyor Societe Generale de Surveillance showed that exports for the same period fell 11.8 percent.

Traders say that despite sluggish exports, prospects of a dent in supply due to the monsoon and firm technical charts are attracting buying interest.