Presumably because the "Y" (meaning "Economy", not necessarily Y-class Economy) ticket was not issued in an upgradeable fare class (currently Y/B/M/U, soon to be increased to also include K/H/L/Q). The OP says, just above your post, that the ticket "was dirt cheap". Hence, I really doubt it's in an upgradeable fare class!!!
The OP refers to "J" in the context of Business, though they clearly know/write that the actual class involved is "O". "Y" and "J" are commonly used as generic indicators of class of travel (perhaps in the case of KLM we should use "M" instead of "Y" as that is what is often printed on their boarding passes), rather than an actual indication of the specific fare bucket involved.
And if the O award was booked as a promoaward, it of course cannot now be cancelled (well, it can, but no refund will come of it).