By Feiwen Rong Nov. 20 (Bloomberg) -- Palm oil futures in Malaysia fell for the first time in three days, as a decline in crude oil prices to the lowest in 22 months dimmed demand outlook for the commodity at a time when stockpiles have risen to a record. Crude in New York fell for a fifth day, approaching $50 a barrel, as the contracting world economy increased concern that demand for fuels will slow. Palm oil, used mainly in food, tracks crude oil as it is also used in biofuels. ``The palm oil market sentiment is very weak now and it's largely tracking crude oil performance,'' said Ong Chee Ting, analyst at Aseambankers Malaysia Bhd., by phone from Kuala Lumpur today. ``And the excess in inventories doesn't help.'' Palm oil for January delivery declined 3.5 percent to 1,428 ringgit ($394) a ton on the Malaysia Derivatives Exchange before closing at 1,468 ringgit. Futures have lost 68 percent since reaching record 4,486 ringgit a ton on March 4. Crude oil for December delivery fell as much as $1.5, or 2.8 percent, to $52.12 a barrel on the New York Mercantile Exchange before trading at $52.13 at 6:07 p.m. in Singapore. Malaysia's palm oil inventories last month climbed to 2.09 million tons and production gained 4.6 percent to a record 1.65 million tons from the previous month. Stockpiles in Malaysia and Indonesia, the top producers, may total more than 5 million tons in November, Godrej International Ltd. Director Dorab Mistry said. Demand may get a short-term boost as India, the largest palm oil buyer after China, imposed a 20 percent duty on purchases of crude soybean oil, the main substitute product. The tax, aimed at protecting oilseed growers from duty-free imports, was announced late evening on Nov. 18. India Tax ``Over time, we believe India will introduce a similar tax on the purchases of palm oil to prevent too much imports from hurting local farmers,'' said Ben Santoso, analyst at DBS Vickers Securities in Singapore. Soybean oil for December delivery on the Chicago Board of Traded fell 2.1 percent to 31.68 cents a pound at 6:07 p.m. in Singapore in after-hours trading. Indonesia's state marketing center accepted bids for 6,000 tons of the 9,500 tons of palm oil offered in a tender. The center, which markets palm oil from state plantations, sold 2,000 tons from Dumai port in Riau province to PT Nagamas Palmoil Lestari and 2,000 tons out of Belawan port in North Sumatra. It fetched 5,050 rupiah a kilogram for both sales. PT Nagamas Palmoil Lestari also bought 1,000 tons from Siak port in Riau at 4,960 rupiah a kilogram and a further 1,000 tons were sold to PT Sinar Alam Permai at 4,875 rupiah from Boom Baru port in South Sumatra. To contact the reporter on this story: Feiwen Rong in Singapore at frong2@bloomberg.net

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