As recently as three months ago, key raw materials such as crude oil and copper hit record highs on the belief that China and other emerging countries would 'decouple' from the industrialised nations' economic problems.

Only the most optimistic commodities bull would still cling to that thesis.

Investors, analysts and industry executives now reckon that the year-long financial crisis has not only badly knocked the economies of the US, Europe and Japan, but is now also slowing the explosive growth of emerging countries, causing raw materials prices to tumble.

The Reuters-Jefferies CRB index, a global benchmark for commodities, on Thursday hit a four-year low of 275.4 points, down almost 45 per cent from July's all-time high.

Oil prices have dropped below $70 a barrel and copper has fallen to a 34-month low.

"We have underestimated the depth and duration of the global financial crisis and its implications on economic growth and commodity demand," says Jeffrey Currie, head of commodity research at Goldman Sachs in London.

The Baltic Dry Index, a global measure of shipping cost seen as an indicator of global economic activity, on Thursday fell 6.75 per cent to its lowest level since November 2002.

The index has plunged 53.2 per cent since the end of September.

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Opec, the oil exporting countries' cartel, summarised the new landscape earlier this week, warning that "there is mounting evidence that the US economy might already be in the midst of a recession", adding that "the same applies to the EU and Japan" and that the crisis could now spill over to emerging countries, which "until lately appeared to be partly shielded from significant economic contagion".

Even if governments were successful in calming equity markets and unfreezing credit markets in the near future, Opec said that "the fall-out on the real economy from the financial market headwinds is expected to be considerable".

The International Monetary Fund has cut its forecast for global economic growth next year to 3 per cent - the boundary that usually defines a global recession - down from 5 per cent in 2007 when commodity prices were rising.

The marked slowdown in demand comes at a time when investments made in the early 2000s as a response to high prices start bearing fruit, increasing global supplies particularly in the oil sector, but also in some minerals and metals. The result is that the supply and demand balance of some commodities, after years of deficit, will swing into large surplus in 2009.

In commodities, relatively small shifts from deficit to surplus could have large price effects, analysts say.

The supply response is clear among agricultural commodities, such as corn or wheat: farmers reacted to last year's record prices by sowing more acres that now are being harvested in a bumper crop.

Corn prices, for example, have fallen to a 12-month low while soyabean is trading at its lowest level since August 2007.

But it is also manifest in other sectors.

For example, Opec's spare capacity next year will rise above 3m barrels a day for the first time since 2002 on a combination of new oil fields coming into production, just as demand for the cartel's output falls.

That implies, says Neil McMahon, of Bernstein, an oil price in the mid $70s next year.

Even in commodities such as copper where supply is still struggling to catch up, the supply and demand balance would be still looser.

On top of mounting economic weakness, the lack of credit has generated severe dislocation in the commodity markets, in some cases substantially depressing demand far below levels suggested by weak economic conditions.

Looking ahead, executives, analysts and bankers agree that the commodities boom is not dead. Having retraced from their peaks, prices are pausing, they say.

Javier Targhetta, senior vice president at Freeport-McMoran, the world's largest publicly traded copper producer, says that the boom's fundamental drivers, such as China's urbanisation or political impediments to investment amid resource nationalism, will continue to crimp supply.

"In addition, the current period of low prices and the credit crunch could delay projects, meaning that supply in the future will be lower than forecast," he says.

But for now, even the most bullish executives are hoping only for prices to stabilise.