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Copper sheets are seen in a deposit inside Barrick’s Zaldivar copper mine at the foothills of the Antofagasta region north of Santiago, Chile.Julie Gordon/Reuters

Is it too early to pronounce the so-called commodity super-cycle over?

Just maybe. Two Canadian commodity indexes came out Monday, and they both suggest that raw materials are going through a modest stumble, not the huge blow up being forecast by the commodity doom and gloom crowd.

The indexes are from Toronto-Dominion Bank and Bank of Nova Scotia, whose top commodity analyst gave a relatively sanguine observation on the overall trend, despite April's swoon for precious metals.

"Financial market concern over the outlook for commodity markets was overblown," said Patricia Mohr, Scotiabank's vice-president of economics.

A big worry for commodity bears is that China's red-hot growth rate is slowing, but Ms. Mohr noted that while the Asian powerhouse's first-quarter gross domestic product has slowed slightly, "actual demand for raw materials was robust in China. The double-digit growth of China's passenger car market, up 20 per in [the first quarter], reinforces its importance as a driver of growth in worldwide auto demand and related commodities such as copper."

Here at Inside the Market, we're watching closely the debate on the fate of the commodity super-cycle, or the idea that raw material prices are in a generational upswing. If the cycle is intact, investors should load up portfolios with the usual suspects: miners, oil companies, forestry concerns, and fertilizer makers - sectors that just happen to be over-represented on the TSX.

If the long-term run is over, investors should head for the hills and dump any company in the raw materials business. The more venturesome could sell the Canadian or Australian dollar short while awaiting the terrible downturn that lower raw material values will inflict on the economies of the two resource-dependent countries.

Among the more prominent prognosticators forecasting an end to the long boom in commodities is U.S. money manager Stan Druckenmiller, who last week said the trend is over in remarks to New York's annual Sohn investment conference. He forecast that one of the casualties of weaker commodities would be the Australian dollar.

But if commodities are about to roll over and play dead, it isn't exactly what has been happening in the real world.

TD noted that there has been a sharp sell off in selected raw materials, but it has been narrowly based. "The pullback was largely concentrated in precious metals and industrials, while others, including natural gas, agricultural and forestry commodities, have held up quite well."

The bank's commodity price index "has held fairly steady, suggesting that the impact of the decline in commodity prices on Canada is likely to be softer than headlines would suggest." In fact, the index has held steady since the second half of 2011, a trend the bank believes will continue as strength in natural gas and lumber offsets weakness in industrial commodities.

The index the bank compiles is weighted to export values, and because it has been holding up well, the impact of the drop in commodity prices on the Canadian economy "is likely to be softer than what media headlines would suggest."

To be sure, the bank isn't taking the opposite view and turning wildly bullish on commodities. It believes that after a decade of rapid growth, commodities are taking a breather, with modest global growth providing some support for the sector.

Scotiabank's index fell modestly in April, but the bank had some bullish observations on potash, copper, and natural gas.

Potash prices, the bank believes, "are now at bottom. On a more positive note for Western Canada's potash producers, shipments surged in the first quarter of 2013." In particular, it said Potash Corp. doubled its shipments. The bank is also looking for continued growth for the fertilizer ingredient in both Brazil and China

The market for copper is also looking up, with the bank expecting "China's imports of refined copper to increase over the next several months due to a severe shortage of scrap in China and lower domestic refined output." Another plus is that copper warehouse stocks in Shanghai have dropped from a peak level of nearly 800,000 tonnes in February to 600,000 tonnes at the end of April and "will decline further" in the bank's view.

The longer-term outlook for natural gas also looks upbeat, driven by the interest in Japan, China, and South Korea in liquefied natural gas and fuel switching from diesel in the transportation sector.

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