Palm Oil Climbs to Seven-Week High on Flood Fears in Top Growers
Palm oil advanced to the highest intraday level in seven weeks on worries that storms and floods in major growers could disrupt supply, while investors are also on alert for a potential import tax hike in top buyer India.
Indonesia has issued flood warnings for provinces in Kalimantan and Sumatra, adding that medium to heavy rain may persist through Monday over most of the country.
Rains in central Kalimantan have led to widespread floods, cutting off several key access roads, local news agency Kompas reported.
In Malaysia, Typhoon Nesat could bring continuous rain over parts of top-growing states, Sabah and Sarawak, according to the weather department.
Continuous heavy rain and prolonged floods disrupt harvesting and transport of palm fruit, as well as reduce oil quality.
Traders are concerned about the impact of wet weather and tropical storms on palm oil production in East Malaysia, as well as floods in central Kalimantan, according to Marcello Cultrera, Kuala Lumpur-based director at Apricus 8 Pte Ltd.
In addition, speculation that India is examining a proposal to raise palm oil import taxes is also a concern for the market, he said.
"Consumers may look to cover their palm requirements ahead of a potential higher import tax and weather-related logistical disruptions," Cultrera said.
Futures for January rose as much as 3.8% to RM4,165 a ton, a fourth day of gains and the highest intraday level since Sept 1. Soyoil, palm's closest rival, climbed for a third day in Chicago to head for its strongest close since June.