04/02/2012 (Reuters) - Malaysian crude palm oil closed higher on last minute short-covering on Friday ahead of a long weekend holiday, reversing earlier losses caused by a stronger ringgit currency that has hurt refiner margins as demand slows.

The ringgit has strengthened around 5 percent against the dollar in 2012, making it more expensive for refiners to buy ringgit-priced feedstock to process.

"The market pulled up a bit after the break, it seems to me most people are covering their shorts ahead of the long weekend," said a trader with a foreign commodities brokerage in Kuala Lumpur. 

Benchmark April palm oil futures on the Bursa Malaysia Derivatives Exchange ended up 1 percent to close at 3,085 ringgit ($1,025) per tonne. The futures market has lost 2.8 percent so far this year.

Traded volumes stood at 19,683 lots of 25 tonnes each, thinner than the usual 25,000 lots ahead of a long weekend holiday.

The market was on the lookout for a possible announcement next week on Malaysia's crude palm oil quota that has been delayed since December, which hampered export licence holders' ability to supply overseas refiners with cheap feedstocks.

On the demand side, Malaysian palm oil exports for January eased close to 12 percent and 13 percent, according to cargo surveyors Intertek Testing Services and Societe Generale de Surveillance.

The decline was in line with market's expectation as top buyers including China, India and the European Union cut back orders.

But traders also attributed the fall to the shift in orders to Indonesia, which slashed export taxes for processed oils.

In response to the tax structure, Malaysia will reform its crude palm oil export duty policy and introduce a 1 billion ringgit fund, a Malaysian daily reported on Friday, citing unidentified sources.

Some traders see prospects of weaker demand for Malaysian palm oil as Brazilian soybean harvest will start soon and major consumers will start looking at these offers.

"The market will be competitive and we need not only to fight the Indonesia products but also beans from South American origin," said another trader based in Malaysia.

Indonesia, meanwhile, is expected to export more crude palm oil to Pakistan as a result of a cut in import duties imposed by Islamabad following a trade pact signed on Friday, the Pakistani ambassador said.

Brent crude rose above $112 on Friday as Iran's leader Ayatollah Ali Khamenei warned that the country would retaliate over an oil embargo "at the right time".

The U.S. soyoil contract for March delivery gained 0.5 percent in Asian trade while the most active September 2012 soyoil contract on China's Dalian Commodity exchange inched up 0.2 percent.

  Palm, soy and crude oil prices at 1001 GMT
                                                                           
  Contract                    Month    Last   Change     Low    High  Volume
  MY PALM OIL           FEB2    3060   +30.00    3047    3063      77
  MY PALM OIL           MAR2    3082   +22.00    3049    3082    1709
  MY PALM OIL           APR2    3085   +29.00    3050    3085   11368
  CHINA PALM OLEIN  SEP2    8084    +6.00    8070    8120   79004
  CHINA SOYOIL          SEP2    9104   +16.00    9088    9134  229776
  CBOT SOY OIL          MAR2   51.43    +0.24   51.08   51.44    3064
  NYMEX CRUDE         MAR2   96.80    +0.44   96.18   96.89   16375
                                                                           
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  Crude in U.S. dollars per barrel
       
 * Bursa Malaysia holds its annual Palm and Lauric Oils
Conference & Exhibition Price Outlook 2012 from March 5 to 7 in
Kuala Lumpur. For details, see www.pocmalaysia.com 
($1= 3.01 Malaysian ringgit)