Floods in Malaysia may drive up palm oil price

Severe flooding in Malaysia looks likely to affect palm oil supplies for November and December, sparking a shortage that would drive up prices.

Sabri Ahmad, chairman of Malaysian Palm Oil Board, told Reuters news agency that he expects December production to be down. "At this stage it is difficult to say how much but the estimate for 2007 production is 15.5 to 15.7 million tonnes."

Other industry insiders have said output could be reduced by 18 per cent from November - and growers have predicted reduced output of as much as 30 per cent.