May 8, 2013 / 9:32 PM / 5 years ago

COMMODITIES-Few markets gain; Druckenmiller says supercycle over

* Hedge fund legend says decades-long rally in commods over
    * Druckenmiller calls for shorting of Aussie dollar
    * Copper ends up 2 pct after bullish China trade data
    * Oil ends mixed; grain and soy futures mostly down

    By Barani Krishnan
    NEW YORK, May 8 (Reuters) - Copper prices rose but most
commodities were lukewarm on Wednesday despite strong trade data
from major consumer China, underscoring comments by hedge fund
legend Stanley Druckenmiller that the decade-long super rally in
raw materials was over.
    Druckenmiller, who once managed up to $22 billion as 
investment chief for currency trading mogul George Soros, is the
most prominent figure in the investing world so far to join the
chorus of concern that recent tumbles in commodity prices
signaled not a correction but the end of a "supercycle".
    Supercycles refer to decades-long price rallies. Three have
occurred in commodities since World War II. The first involved
post-war reconstruction and the second came amid oil supply
shocks of the 1970s. The third began after the end of the Asian
financial crisis in the late 1990s saw China rebound with
double-digit growth, and inflation creep across the world.
    On Wednesday, China's monthly trade data showed exports and
imports grew more than expected in April, offering the
possibility of a better outlook for the world's No. 2 economy.
 
    Copper prices rose 2 percent, hitting a three-week high, as
the trade data fueled hopes of more demand for the metal from
its biggest buyer, China. But oil and crop futures ended mixed
on views that a strong Chinese economy alone will not prevent a
global slowdown.
    Some were even skeptical of how much copper would benefit
from China.
    "It is too soon to get overly optimistic about demand from
China given the high level of inventories there for the likes of
copper," said Ross Strachan, economist at London's Capital
Economics. "There are still structural issues in China and
you're unlikely to see rapid acceleration of growth."
    In mid-April, Copper prices fell to 1-1/2 year lows below
$7,000 a tonne. At the time, benchmark Brent crude oil slipped
below $100 a barrel the first time in 9 months and gold had its
biggest drop in dollar terms in a day. The April sell-off was
triggered by signs of stagnating China growth, euro zone debt
trouble and uncertainty about further U.S. economic stimulus.
    
    "SHORT THE AUSSIE"
    Druckenmiller's views were the latest in a series of
commentaries by analysts saying the commodities supercycle was
possibly coming to an end as China struggles to maintain its
phenomenal growth of the last decade while the U.S. and European
economies remain anemic.
    Speaking at the Ira Sohn hedge fund industry conference in
New York, Druckenmiller urged investors to avoid currencies of
countries that depend largely on the export of raw materials for
their income. Australia, Canada and New Zealand are among
countries that count heavily on commodities for revenue.
    Druckenmiller, who together with Soros famously "broke the
Bank of England" when they shorted British sterling in 1992,
encouraged investors to short the Australian dollar after
Canberra's decision this week cut interest rates to record lows.
 
    Druckenmiller also called the U.S. Federal Reserve's monthly
bond purchase of $85 billion -- one of the pillars supporting
commodity prices -- the "most inappropriate" monetary policy in
the history of the developed world. 
    In Wednesday's session, three-month copper on the
London Metal Exchange closed up $154 at $7,419 a tonne, after
hitting a 3-week high at $7,480.. Gold climbed over 1
percent, rising for the first time in three sessions. Those
gains helped the 19-commodity Thomson Reuters-Jefferies CRB
index close up more than half a percent.
    Oil prices ended mixed, with London-traded Brent 
settling down 6 cents lower at $104.34 per barrel while U.S.
crude finished up 1 percent at $96.62. 
    U.S. grain and soy futures closed mostly lower as farmers
geared up for what is expected to be their best stretch of
planting this spring. 
    
 Prices at 5:08 p.m. EDT (2108 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    96.64     1.02   1.1%    5.2%
 Brent crude                104.30    -0.10  -0.1%   -6.1%
 Natural gas                 3.978    0.058   1.5%   18.7%
 
 US gold                   1473.70    24.90   1.7%  -12.1%
 Gold                      1473.44    21.45   1.5%  -12.0%
 US Copper                  337.05     6.80   2.1%   -7.7%
 LME Copper                7419.00   154.00   2.1%   -6.5%
 Dollar                     81.939   -0.314  -0.4%    6.7%
                             
 
 US corn                    675.00    -1.50  -0.2%   -3.3%
 US soybeans               1479.00    15.50   1.1%    4.2%
 US wheat                   696.75    -2.75  -0.4%  -10.4%
 
 US Coffee                  144.15     1.45   1.0%    0.2%
 US Cocoa                  2391.00    -5.00  -0.2%    6.9%
 US Sugar                    17.47    -0.17  -1.0%  -10.5%
 
 US silver                  23.927    0.121   0.5%  -20.8%
 US platinum               1504.90    23.70   1.6%   -2.2%
 US palladium               698.25    17.65   2.6%   -0.7%
 
 (Editing by David Gregorio)

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