02/01/2015 (Reuters) - Flooding across parts ofmajor rubber and palm oil producer Malaysia due to monsoon rainshas cut production in December, a senior government officialsaid, squeezing supply and lifting prices.

Heavy downpours and floods this month have destroyed acresof plantation and forced a quarter of a million people to beevacuated from their homes, local authorities say.

Plantation Industries and Commodities Minister Douglas UggahEmbas expects rubber supply to "reduce drastically" in early2015 due to the floods.

"For our country we are expecting it will reduce around30,000 tonnes (in December)...the reason is because of the rain,so there's no tapping," Douglas told reporters in Kuala Lumpuron Wednesday.

Palm oil output may decline by about 15-30 percent inDecember against the usual drop of 10 percent during the rainyseason, he said.

Heavy rains prevent plantation workers from harvesting palmfruit, resulting in rot. Fruit that is harvested, however, maynot get crushed into crude palm oil as mills are shut due toflooding or as roads out of the estates are cut off.

Some planters and traders expect the wet weather to curbDecember output by 20 percent or more as thunderstorms andfloods disrupt harvesting and force mills to shut.

Palm oil stocks at end-December are expected to fall to 2million tonnes from 2.27 million tonnes in November, Douglassaid.

The Southeast Asian country expects 2015 production to be 20million tonnes for palm oil and 700,000 tonnes for rubber, headded.

The benchmark March contract on the Bursa MalaysiaDerivatives Exchange hit a nearly two-month high of 2,305ringgit ($660) per tonne on Wednesday.

It was trading at 2,276 ringgit as of 0515 GMT.