Commodity prices tumbled Friday as investors were spooked that China might have to raise interest rates to combat inflation.
That could slow down China's strong economy, which would reduce demand for many basic materials including copper, crude oil and soybeans. Many countries have relied on strong growth in China to offset weak demand in countries like the U.S., where the economy remains sluggish.
Copper for March delivery fell 12.45 cents, or 3.1 percent, to settle at $3.904 a pound. Benchmark crude for January delivery fell $2.93, or 3.3 percent, to $84.88 a barrel on the New York Mercantile Exchange.
January soybeans plummeted 70 cents, or 5.2 percent, to $12.69 a bushel, while March sugar dropped 3.45 cents, or 11.6 percent, to 26.21 cents per pound.
John Sanow, an analyst with Telvent DTN, said the sharp decline in grain prices was led by speculative investors, like investments funds, that never plan to take actual delivery of the crops pulling out of the market.
"They're just trying to get out of risky investments at this point," Sanow said.
The Chinese government said Thursday that the pace of inflation hit a more than two-year high in October. That sent Chinese markets sharply lower in overnight trading before the sell-off hit stocks and commodities in the U.S. Friday.
Analysts were mixed over whether this pullback could continue into next week.
George Gero, vice president at RBC Global Futures in New York, said such a big drop could take "a few days to clear out." He said bargain hunters looking to get back into the market might wait a little longer than usual because Friday's losses were so big.
Spencer Patton, founder and chief investment officer for hedge fund Steel Vine Investments LLC, said that similar retreats have been seen when questions about the pace of demand from China cropped up earlier this year. He added that many of those retreats were short lived.
A nearly unbroken climb higher in commodity prices over the past month also could be contributing to Friday's losses. Profit taking could be accelerating the steep decline.
"This has been a long overdue correction for commodities," Patton said.
Despite Friday's declines, oil, gold and soybean prices are all still above where they were trading at the beginning of the month.
In other trading, gold for December delivery fell $37.80, or 2.7 percent, to $1,365.50 an ounce. Silver fell $1.463, or 5.3 percent, to $25.942 an ounce.
Heating oil for December delivery dropped 6.34 cents, or 2.6 percent, to $2.3632 a gallon, while gasoline fell 2.58 cents to $2.2099 a gallon on the New York Mercantile Exchange. Natural gas fell 12.8 cents, or 3.3 percent, to $3.799 per 1,000 cubic feet.
March corn dropped 30 cents, or 5.3 percent, to $5.340 a bushel. After rising earlier in the day, wheat prices also fell, declining 34.75 cents to $6.6925 a bushel.