By Sungwoo Park Nov. 26 (Bloomberg) -- Commodity prices may fall a further 10 percent to 15 percent before nearing the end of their decline next year as a faltering world economy stifles demand for raw materials, Australia & New Zealand Banking Group forecast. Crude oil is the “most vulnerable” and may fall as low as “late $40s” a barrel, Geoff Clear, executive director and head of commodities, said today. Copper may “disappoint” despite tight supply, while zinc and lead may fare better, he said. Commodities markets are heading for the biggest annual drop in more than two decades as the U.S., U.K., Japan, Germany and the 15 European nations that use the euro slip into a recession. Oil has plunged 65 percent since reaching a record $147.27 in July and copper has fallen by half this year. “Although most of the price declines have already occurred, with funds quickly factoring in the downside, prices could drop further before hitting the bottom of the cycle,” Clear said in Seoul. Commodities may “bottom out” in first half of 2009, probably in June, he said. Prices may fall 40 percent on average next year, he said, as demand slows in China, the world’s biggest buyer of base metals including copper, aluminum and nickel. “Base metals have been downgraded to reflect slowing demand in China, and other major economies moving into recessionary conditions in 2009,” Clear said. To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.

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