December 23, 2006	Saturday	Zilhaj 01, 1427

JAKARTA, Dec 22: Malaysian palm oil futures touched a one-week high on Friday on fears of supply disruptions after rains in producing areas of southern Malaysia and short covering before the end-year holiday.

The benchmark third-month March contract on the Bursa Malaysia

Derivatives exchange hit 1,907 ringgit a ton, settling at 1,901 ringgit, its highest since Dec. 14 and up 19 ringgit from Thursday's close at 1,882.

Other traded contracts were up between 15 and 28 ringgit. Overall volume was 7,111 25-ton lots.

Dealers said the market was keeping an eye on the weather in southern Malaysia, which was hit this week by its heaviest rains in a century. The resultant flooding forced about 75,000 people to flee their homes, news reports said.

The floods have cut off main roads and disrupted train services in the southern state of Johor, the worst-hit state, which is also a major rubber and palm oil producing region.

Johor is one of Malaysia's main palm oil producing areas and it is the main supplier for palm oil refineries in southern Malaysia.

Concern about persistent bad weather which may lead to supply disruption of palm oil supported the market today, said a trader in Kuala Lumpur.

If it (bad weather) worsens in the next three days, palm oil will go higher, he added.

The long holiday also prompted dealers to cover their short position in anticipation of higher prices after the holidays.

There is a feeling maybe after the New Year holiday funds will come back and the market may go up higher, said another trader.

People don't want to take chances after the holiday. Dealers said palm oil would meet next resistance at 1,920 ringgit and support was seen firm at 1,880-1,900 for next week.

Gains in rival Chicago soyaoil futures on Thursday also kept palm oil prices firm.—Reuters