(Bloomberg News) Speculators cut bullish wagers on commodities by the most in 2012 on mounting concern that the slowest Chinese growth in almost three years will curb gains in demand for everything from copper to cotton.

Money managers lowered net-long positions across 18 U.S. futures and options by 9.3 percent to 1.01 million contracts in the week ended April 10, the biggest reduction since Dec. 20, data from the Commodity Futures Trading Commission show. Copper holdings tumbled 84 percent, the most since November. Hedge funds are now betting on lower cotton prices.

China's economy, the biggest consumer of energy and metals, expanded 8.1 percent last quarter, less than the 8.4 percent anticipated by economists surveyed by Bloomberg, government data showed April 13. The World Bank cut its growth estimate for the Asian nation to a 13-year low a day earlier. Commodities will "drift lower" this quarter as central banks refrain from adding further stimulus, UBS AG said in a report last week.

"Many areas of the world that have been big sources of demand for commodities are slowing," said Bill Greiner, who helps manage $13 billion of assets as chief investment officer at Mariner Wealth Advisors in Kansas City, Missouri. "If anything, we expect growth worldwide to be a little softer than people are looking for."

The Standard & Poor's GSCI Spot Index of 24 raw materials dropped 1 percent last week, led by natural gas, sugar and copper, and fell another 0.6 percent today. The MSCI All-Country World Index of equities retreated 1.5 percent last week for a second consecutive decline, to a two-month low on April 11.

Copper Tumbles

Fourteen of the raw materials tracked by the S&P GSCI retreated. Copper's 4.4 percent tumble was the biggest this year. Natural gas extended a slide to a 10-year low, trading below $2 per million British thermal units. Cotton futures rose 1.3 percent, rebounding from a 5.3 percent drop the prior week.

The World Bank said the China will grow 8.2 percent this year, down from a January projection of 8.4 percent and the slowest pace since 1999. Chinese Premier Wen Jiabao cut the nation's economic growth target to 7.5 percent last month, the lowest since 2004. China accounts for 40 percent of copper consumption and 11 percent of oil demand, according to Barclays Capital and the International Energy Agency.

Labor Department

Confidence among U.S. consumers cooled in April, a sign that the moderation in job growth may limit the biggest part of the economy, the Thomson Reuters/University of Michigan's preliminary index of sentiment showed April 13. Filings for unemployment benefits rose to a two-month high in the week ended April 7, the Labor Department said April 12. North America accounts for 11 percent of copper demand and uses 26 percent of the world's oil, Barclays and International Energy Agency data show.

Slowing growth may prompt policy makers to increase monetary easing. The People's Bank of China reported on April 12 an unexpected surge in new yuan loans during March, showing the Communist Party may be trying to avoid a deeper decline in growth. On April 14, the Asian country widened the yuan's trading band for the first time since 2007.

Federal Reserve Bank of New York President William C. Dudley and Fed Vice Chairman Janet Yellen endorsed the central bank's view last week that borrowing costs are likely to stay low through late 2014. Speaking in New York on April 11, Yellen said she considers "a highly accommodative policy stance to be appropriate in present circumstances."

Even without additional monetary easing, low interest rates and other existing policies will help support demand for commodities in the second half of the year, said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based consultant.

'Awash In Liquidity'

"The world is awash in liquidity," said Schenker, who was the third-most accurate forecaster for industrial metals in Bloomberg Rankings the past eight quarters. "You've got a bunch of hammers out there looking for some nails. People need to put this money somewhere."

Investors pulled $636.2 million from commodity funds in the week ended April 11, the most since early January, according to Brad Durham, a managing director at Cambridge, Massachusetts- based EPFR Global, which tracks money flows. Gold and precious metals outflows totaled $290.3 million, the biggest exit since Dec. 28, he said.

Fed Minutes

Minutes from the Fed's March policy meeting, which were released on April 3, showed policy makers will probably hold off increasing monetary accommodation unless the U.S. economic expansion falters. Crude oil, copper, nickel and cotton may decline "in the absence of further injections" of stimulus measures, UBS analysts led by Hong Kong-based Peter Hickson said in the report April 12.

Goldman Sachs Group Inc.'s commodity research team, led by Jeffrey Currie in London, cut its three-month recommendation on raw materials to "neutral" on March 28, saying that the economy will "soften" this quarter.

Money managers reduced their bullish bets on copper by 15,687 contracts to 2,955 as of April 10, the CFTC data show. That's the lowest since funds were net-short, or betting on declines, in January.

The value of Chinese homes sold dropped 18 percent in the first three months of the year, the government reported April 13. Construction generates about 40 percent of demand for the metal, according to the Copper Development Association. Stockpiles monitored by the Shanghai Futures Exchange rose to the highest since at least 2003 on March 15 and have more than doubled this year.

Farm Bets

A measure of 11 U.S. farm goods showed speculators lowered wagers on a rally for agricultural commodities by 4.9 percent to 669,280. Holdings fell for a third week, the longest slump since December. Speculators have a net-short position of 2,561 contracts in cotton, compared with net-long bets of 7,296 contracts a week earlier.

Sugar wagers dropped 9.4 percent to 107,232, the lowest in four weeks. Sixteen of 22 analysts expect prices in New York to decline next week and one was neutral, according to Bloomberg's weekly sentiment survey. The traders were bearish for a seventh consecutive week, the longest stretch since at least 2007, when the surveys began.

"There's more concern now over the possibility of a global recession," said James Dailey, who manages $215 million of assets at TEAM Financial Management LLC in Harrisburg, Pennsylvania. "It's quite difficult to navigate trading in commodities right now because things are going to have to get worse before policy makers step in."