MARKET DEVELOPMENT
Monsoon Surge in Malaysia Raises Fresh Flood Risk in Palm States
Monsoon Surge in Malaysia Raises Fresh Flood Risk in Palm States
05/01/2015 (Bloomberg) - A monsoon surge that brought the worst floods in decades to Malaysia, hurting palm oil output in the world’s second-largest grower, is forecast to move south this week, risking further inundations in Johor and Sarawak.
Heavy rains will probably start on Jan. 7 or Jan. 8 in the two states and could last two or three days, potentially causing floods, according to Ambun Dindang, an officer at the Malaysian Meteorological Department. Johor, at the southern end of Peninsula Malaysia, together with Sarawak in Borneo Island account for about one third of the country’s total production.
Palm oil rallied last week to the highest level in almost two months after the severe flooding in some states in the north hurt harvesting, and Ambun’s forecast raises the possibility of a second wave of disruptions further south. The wetter-than-usual weather that stretched from southern Thailand, through Malaysia and into Indonesia also triggered rubber-supply concerns, sending futures into a bull market.
“At the moment, the cloudy areas are more towards the sea, just at the northeast of Johor and northwest of Sarawak,” Ambun said in a telephone interview from Petaling Jaya, near Kuala Lumpur today. “These patches of clouds are still hovering over this place. So once it moves in, you can see some increase in rainfall amount, especially in Johor and Sarawak.”
Palm oil for March delivery dropped 0.1 percent to 2,280 ringgit ($644) a metric ton at the midday break on Bursa Malaysia Derivatives today. Last month, most-active futures advanced 4.3 percent as the floods spread in Kelantan, Terengganu and Pahang, three states that lie north of Johor along the east coast of Peninsula Malaysia. The price rallied to 2,308 ringgit on Dec. 29, the highest since Nov. 4.
Floods Possible
“At the beginning of the monsoon season in November and December, normally the northeastern part of Peninsula Malaysia will get this impact of the monsoon surge, and then it propagates to the south,” said Ambun. “Floods are possible,” he said, referring to areas in Johor and Sarawak.
Malaysian output may have dropped 22 percent to 1.36 million tons last month, Ivy Ng, an analyst at CIMB Investment Bank Bhd., wrote in a report dated yesterday, citing a survey by the bank’s futures team. Inventories probably declined to 2 million tons, providing short-term support to prices, Ng said.
Prime Minister Najib Razak is down with E. coli after visiting the flood-hit areas, his media office said in a Twitter posting. Flood victims are concerned about diseases caused by contaminated water, rubbish and carcasses, the Star newspaper reported on its website today.
Heavy rains will probably start on Jan. 7 or Jan. 8 in the two states and could last two or three days, potentially causing floods, according to Ambun Dindang, an officer at the Malaysian Meteorological Department. Johor, at the southern end of Peninsula Malaysia, together with Sarawak in Borneo Island account for about one third of the country’s total production.
Palm oil rallied last week to the highest level in almost two months after the severe flooding in some states in the north hurt harvesting, and Ambun’s forecast raises the possibility of a second wave of disruptions further south. The wetter-than-usual weather that stretched from southern Thailand, through Malaysia and into Indonesia also triggered rubber-supply concerns, sending futures into a bull market.
“At the moment, the cloudy areas are more towards the sea, just at the northeast of Johor and northwest of Sarawak,” Ambun said in a telephone interview from Petaling Jaya, near Kuala Lumpur today. “These patches of clouds are still hovering over this place. So once it moves in, you can see some increase in rainfall amount, especially in Johor and Sarawak.”
Palm oil for March delivery dropped 0.1 percent to 2,280 ringgit ($644) a metric ton at the midday break on Bursa Malaysia Derivatives today. Last month, most-active futures advanced 4.3 percent as the floods spread in Kelantan, Terengganu and Pahang, three states that lie north of Johor along the east coast of Peninsula Malaysia. The price rallied to 2,308 ringgit on Dec. 29, the highest since Nov. 4.
Floods Possible
“At the beginning of the monsoon season in November and December, normally the northeastern part of Peninsula Malaysia will get this impact of the monsoon surge, and then it propagates to the south,” said Ambun. “Floods are possible,” he said, referring to areas in Johor and Sarawak.
Malaysian output may have dropped 22 percent to 1.36 million tons last month, Ivy Ng, an analyst at CIMB Investment Bank Bhd., wrote in a report dated yesterday, citing a survey by the bank’s futures team. Inventories probably declined to 2 million tons, providing short-term support to prices, Ng said.
Prime Minister Najib Razak is down with E. coli after visiting the flood-hit areas, his media office said in a Twitter posting. Flood victims are concerned about diseases caused by contaminated water, rubbish and carcasses, the Star newspaper reported on its website today.