Palm oil came within an ace of hitting a five-month high after grower Genting Plantations warned of lower output in November and December, crystallising concerns that flooding will curb Malaysian production.

The plantations group told analysts that palm fruit output, which jumped 26% in October, would fall back 10% this month thanks to heavy rains in Malaysia's Sabah state.

The alert, while insufficient to knock Genting off plans to raise palm fruit production this year, provided "tangible evidence" of the impact of heavy monsoon rains on Malaysian, an investor told Agrimoney.com.

"It is not as if Malaysia is unused to rains. The question is how damaging they are," he added.

Malaysian palm production typically rises towards the end of the calendar year, jumping 27% in October to 1.99m tonnes, its best month since at least 2006.

Flooding to come 

Parts of Indonesia, the world's top palm producer, and second-ranked Malaysia have received downpours delivering more than 2.5 inches as the rainy season ramps up.

Besides hampering harvesting, and delivery of processed palm, rain tends to lower oil yields.

Forecaster Meteorologix warned of further rain to come, in particular in Malaysia, seeing a "developing tropical depression in the southwest South China Sea bringing heavy rains and flooding to portions of the Malay Peninsula over the next days".

Sarawak and Sabah would get "heavy showers".

'Great concern' 

Benchmark February palm oil jumped 1.6% to 2,518 ringgit a tonne in morning trade in Kuala Lumpur, its highest level since mid-June and within four ringgit of hitting its best since June.

"Weather is a great concern," a Kuala Lumpur trader told Reuters, the news agency.

However, palm slipped to  close at 2,481 ringgit a tonne, up only 3 ringgit on the day as traders fretted over moderate export data from cargo surveyors.

Genting shares closed down 0.4% at 7.08 ringgit.

While its pre-tax profits fell 42% to 81.1m ringgit in the July-to-September quarter, thanks in the main to lower palm oil prices and production, the group said it was on course for "reasonable" results.