KUALA LUMPUR, Dec 26: Malaysian palm oil futures jumped 5 per cent on Tuesday to their highest level in nearly eight years, boosted by fears that floods would further cut supplies.

The benchmark third-month March contract on the Bursa Malaysia Derivatives exchange ended up 94 ringgit at 1,995 ringgit ($564) a ton, a level not seen since January 1999.

Dealers said torrential rains in palm-oil producing areas of southern Malaysia could cut the country's palm oil output in December by 20 to 30 per cent from 1.55 million tons produced last month.

Southern Malaysia has been hit by its heaviest rains in a century and the resultant flooding has forced about 50,000 people to flee their homes.

People are talking about massive disruption in supplies, that is why cash prices are at a premium over the futures market, one dealer said.

Other traded contracts closed up between 81 and 105 ringgit.

Overall volumes shot up to 22,389 lots of 25 tons each from around 10,000 to 12,000 lots traded on a normal day.

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. It is the main supplier for palm oil refineries in south Malaysia.

Traders said a decline in exports during the first 25 days of this month had no impact on the market as it had been expected.

Exports of Malaysian palm oil products for December 1-25 fell nearly 18 per cent to 903,550 tons from 1,100,005 tons shipped between November 1 and 25, cargo surveyor Intertek Testing Services said.

Another cargo surveyor, Societe Generale de Surveillance, said exports for December 1-25 fell 16.2 per cent to 914,312 tons.

Traders said there was strong buying in the physical market for prompt shipments. January palm oil in the southern region was quoted at 1,995/2,000 ringgit a ton and trades were done between 1,980 and 1,990 ringgit.—Reuters