Commodity prices dropped across the board again yesterday on deepening concerns about economic weakness in the United States and Europe.
Oil, petrol, silver and palladium each fell more than 5 per cent as yesterday's session came to a close.
New Zealand's vital food commodity exports will also face downward price pressure although economists say they may not be hit so hard.
Slower growth in the US could translate into waning demand for oil and other commodities if businesses and consumers continue to cut back.
Investors are also worried about Europe's sovereign debt problems and weaker manufacturing in China, a huge importer of commodities.
The Standard & Poor's GSCI Index of 24 commodities lost 0.8 per cent during yesterday, declining for an eighth day - the longest losing streak since December 2008.
"The global slowdown is taking root and poised to vanquish hopes of a second-half rebound," said James Dailey at Team Financial Management in Pennsylvania. "That should result in softer-than-expected demand for industrial commodities in particular."
BNZ economist Doug Steel said the risks for commodity prices from what was happening in global markets was pretty obvious "and that's down-wards".
"But the risks have been there for some time.
"I guess the events overnight [Thursday], some of these are being crystalised in terms of share markets peeling off, commodity prices coming back but at this point it's a bit of a shake out, not a collapse," Steel said.
The slump in commodity prices was being driven by markets pricing in the potential for slower global growth and lower demand.
"There's an element of speculation in it too I would suspect, that commodities are often seen as risky assets and tend to have more correlation ... so they tend to move further on the up-side and the down-side."
When commodity prices boomed the kiwi dollar also tended to rise, Steel said.
"But the benefit of having that floating currency is when things get a little bit shaky, as they are at the moment, the kiwi dollar tends to fall in line with these commodity prices so that insulates us from the fall-out in terms of pricing in New Zealand dollars."
Events at the moment were very much about the risk to world growth and what that might do to demand for commodities across the board, although food products were more affected by supply than industrials, Steel said.
"The lamb market at the moment, there's still very tight supply globally. I wouldn't expect lamb prices to come off all that much even with the current conditions," he said.
"Whereas dairy [is] a little more global and supply from a lot more regions, maybe [it will] suffer a little bit more, likewise for beef."
The average price for a basket of products in Fonterra's online dairy auction this week fell 1.3 per cent, with the average winning price of US$3716 ($4446) a tonne 23 per cent lower than as at the start of March.
Risks had been heightened a little over the past week or so with the "shenanigans" on world markets, Steel said.
"That's not to say that it necessarily de-rails New Zealand's recovery and certainly there's plenty of domestic factors to keep things going over the next 12, 24 months."
The Rugby World Cup was one factor and the rebuilding of Christchurch was likely to happen in earnest through next year and beyond, he said.
ANZ economist Steve Edwards said food commodities were relatively insulated from what was happening in hard commodities.
"People still need food to eat but it's early days ... you assume that the soft ones are going to follow them down," Edwards said.
The markets were in a state of panic.
"It hasn't really settled down so it's hard to draw too much of a conclusion other than it [the dollar] has dropped from its very high levels a week ago," he said.
"It's not just one event that's happening, it's two or three combined which is exasperating the [market] decline," he said.
"There's not much we can do but ride the price cycle with our fingers crossed."
- Additional reporting: AP, Bloomberg