With supply tight, rubber futures in Tokyo hit a two-year high on Thursday and benchmark Thai smoked rubber sheet (RSS3) was offered at $4.10 per kg, the record high hit in April, when severe drought cut latex output. Traders said prices could ease if flood water receded completely in the coming week, but they were unlikely to fall sharply since rubber production in the south is usually low at this time of the year, when the rainy season limits tapping.

"Prices should stay firm anyway as we expect supply to remain low due to the wet weather," said a trader on the island of Phuket.

Flooding has also affected the north of Malaysia, the world's number three rubber producer and second-biggest palm oil producer.

Kedah, Perlis and Kelantan, the three agricultural states that border Thailand, were flooded, raising concern that monsoon rain would cut rubber and palm oil supplies there, state news agency Bernama reported on Thursday.

Three people have died in the area and villagers have been forced to move to higher ground.

Malaysian rubber glove makers are likely to raise their prices due to the rise in raw material costs caused by the floods in Thailand.

Malaysia's glove making industry, the largest in the world, gets most of its rubber from Thailand. Trucks cross the border to Malaysia from southern Thailand almost daily, carrying 1,000-1,500 tonnes on average.

"We have revised the latex glove price twice for the past one month, and will continue to monitor the situation and adjust if necessary," said Lim Cheong Guan, executive director of Top Glove, the world's largest glove maker.