Malaysian palm oil futures bounced back from early losses to close 1.3% higher on Thursday, as the market recovered from an oversold state, while gains in soy also boosted sentiment.
Palm lost 10.2% in June on weak fundamentals, as traders expect seasonal output to rise from now until the final quarter of the year, while exports are also seen slowing down until the next major festive season of Diwali in late October.
Benchmark palm oil futures for September delivery on the Bursa Malaysia Derivatives Exchange closed 1.3% higher at RM2,353 (US$584.60) per tonne on Thursday.
The contract hit a seven-month low of RM2,317 on Wednesday and posted its fourth straight weekly fall. Palm lost 13.7% this quarter, its first quarterly drop since the January-March period of 2015 and the biggest since the three months ended September 2012.
Traded volumes stood at 50,864 lots of 25 tonnes each on Thursday.
"The market was oversold and is now going for a retracement," said a trader from Kuala Lumpur.
"It was also up on external markets, Chicago Board of Trade soyoil and Dalian refined, bleached and deodorized palm olien."
Malaysian palm oil shipments fell 9-11% in June from a month earlier, data released by cargo surveyors on Thursday showed, as demand for the tropical oil weakened after Ramadan.
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