06/10/2012 (Reuters) - Malaysian palm oil futures ended higher on Friday as steep losses earlier in the week helped lure buyers back into the market, while there was also some positioning ahead of a now delayed decision on a proposal to cut palm oil export taxes.

Malaysia's cabinet had discussed on Friday a much-awaited proposal to slash crude palm oil export taxes to 8-10 percent from 23 percent, which would boost exports.

But the cabinet postponed taking any decision on the proposal as it needed more time to study the plan, a government official said.

Prices posted a weekly drop of more than 5 percent, their third straight weekly decline.

"This rebound is very much within anticipation, selling has been exhausted," said a dealer with a foreign commodities brokerage in Malaysia. "There's definitely short covering ahead of the weekend."

The benchmark December contract on the Bursa Malaysia Derivatives Exchange rose 2.7 percent to close at 2,415 ringgit ($791) per tonne, after trading in a 2,376-2,448 ringgit range.

Total traded volumes stood at 39,047 lots of 25 tonnes each, much higher than the usual 25,000 lots.

Palm oil had shed more than 11 percent on concerns of rising stocks in the first two days of the week, tumbling to a near 3-year low of 2,230 ringgit per tonne on Wednesday, before paring losses later in the week.

Technicals showed palm oil would rebound further to 2,503 ringgit as it has cleared a resistance at 2,399 ringgit, said Reuters market analyst Wang Tao.

After a steep decline in prices in recent weeks, analysts expect a recovery by the end of the year.  

"In our view, crude palm oil (CPO) prices are due for a significant upward correction, to 3,250 ringgit by end Q4 from current levels near 2,350 ringgit, after an excessive decline in September and October," Standard Chartered analyst Abah Ofon said in a research note.

The recovery will be driven by a drop in Malaysian production and Indonesian inventories in the fourth quarter as well as supportive external markets and bullish CPO price seasonality, the note added.

In a bearish sign for palm oil, Brent crude slid below $112 per barrel on Friday as investors awaited data that is expected to show U.S. unemployment is on the rise, reinforcing concern that a fragile global economic recovery is still under threat.

In other vegetable oils markets, U.S. soyoil for December delivery gained 0.1 percent in late Asian trade. The Dalian Commodity Exchange is closed for a week-long holiday in China and will resume trading on Monday.        

  Palm, soy and crude oil prices at 1005 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      OCT2    2250   +61.00    2200    2260     136
  MY PALM OIL      NOV2    2334   +59.00    2292    2365     785
  MY PALM OIL      DEC2    2415   +63.00    2376    2448   23051
  CHINA PALM OLEIN JAN3    7186   +10.00    7172    7244  220106
  CHINA SOYOIL     JAN3    9278    +6.00    9250    9328  305268
  CBOT SOY OIL     DEC2   51.43    -0.01   51.08   51.65    6561
  NYMEX CRUDE      NOV2   90.99    -0.72   90.76   91.62   20761

  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
  ($1 = 3.05 ringgit)