Commodities tumbled since April as Europe's debt crisis widened. Yields on two-year Greek debt surged to 152 percent last month, compared with 0.29 percent for Treasuries of a similar maturity, and the euro weakened 12 percent against the dollar since the start of May. The region accounts for 19 percent of global copper demand and consumes about one in six barrels of the world's oil.

Global Growth

Fewer youths keeping factories going and more pensioners to support in developing markets such as China and Brazil means the world economy is set to slow, says Goldman Sachs Group Inc. As the so-called BRIC nations slow, global growth probably will peak at about 4.3 percent this decade, according to a Dec. 7 report by the bank's analysts. Russia and India make up the other BRIC nations.

Hedge funds and other money managers reduced their net-long position, or wagers on higher prices, across 18 commodities by 65 percent since April and in the week ended Dec. 20 were the least bullish since March 2009, Commodity Futures Trading Commission data show. They anticipate declines in copper, cocoa, soybean oil and meal, wheat and natural gas.

Investors took $10 billion out of commodities in September, the largest monthly amount ever, because of concerns about European growth, according to Barclays Capital. Commodity assets under management rose 12 percent to $426 billion in the first 11 months of 2011, on track for the worst year since an 18 percent contraction in 2008.

Europe Concern

"The commodities market right now is driven by sentiment, and I think it's fear," said John Stephenson, who helps manage $2.7 billion of assets at First Asset Investment Management Inc. in Toronto. "We are starting into a bear market, because the problems in Europe aren't easily solved. People are liquidating without regard to fundamentals or the attractiveness of a commodity going forward."

Among metals, there will be shortages in copper, tin and palladium this year and narrowing surpluses in aluminum, zinc, silver and platinum, Barclays predicts. In agricultural commodities, Rabobank International anticipates shortfalls in corn, soybeans, coffee and cocoa.

Oil supply will probably lag behind demand for at least a third consecutive year in 2012, Barclays estimates. Inventories in the U.S., the biggest consumer, fell 12 percent since May, Department of Energy data show. Crude traded in New York will average a record $100 a barrel this year, according to the median of 27 analyst estimates.

Weaker Dollar

Commodities may also appreciate in 2012 on prospects for a weakening dollar. The Dollar Index will average 76.1 in the fourth quarter, compared with 79.8 yesterday, the median of nine economist estimates shows. Commodities moved in the opposite direction to the currency in 13 of the past 20 quarters, according to data compiled by Bloomberg.