Australia's pulses industry faces "lasting scars" from a collapse in prices stemming from overstocking in Bangladesh, sparking default on contracts and a dearth of opportunities for farmers to sell forward.
Prices of chickpeas - the biggest pulse crop grown in Australia, which is a major exporter to the Indian subcontinent and, via processors in Dubai, to Europe too – slumped Aus$80 a tonne in 10 days, equivalent to a drop of some 15%.
The decline is believed to have stemmed from Bangladesh, where buyers "purchased heavily ahead of Ramadan, and were left with surplus stock", Owen Goddard, pulses trader at Queensland-based Pentag Nidera said.
And hopes that India would absorb the excess supplies have been dashed with its own crop believed to be far bigger than initially thought.
'Contract default a reality'
"It now appears many of these purchases were speculative, and buyers have since been increasingly slow to open letters of credit and execute shipments," the trading house said.
"In plain English, the risk of contract default has now become reality."
And the fallout will leave "lasting scars on the way pulses are traded in Australia, particularly in forward markets".
Australia's growers produce some 1.6m tonnes of major pulses a year, of which about 700,000 tonnes are typically chickpeas.
One impact is likely to be a further drop in liquidity in a market already reduced by a switch to other crops, and by mergers and acquisitions.
"We have already seen the number of 'serious' players in the chickpea trade reduced," the group said.
Sector deals within the last two years include the Can$8.0m acquisition of New South Wales based Canz Commodities by industry giant Alliance Grain Traders.
Already, Australian traders have started withdrawing bids for chickpeas, or including a "massive risk premium" in any prices, said Pentag Nidera, which admitted that it itself was not posting a bid for new crop chickpeas, although is offering a pool.
Indeed, there is a threat of further pressure on prices from the imminent harvest, a period which anyway tends to depress values as supplies see a temporary spike.
"Clearly, the potential for additional harvest pressure combined with reduced buyer confidence presents a risk for domestic cash values in the October, November December period."
One comfort for pulse farmers is that prices have stabilised in the last few days, ending the week at some Aus$480-485 a tonne.
"It seems we have probably reached the bottom of the move," Mr Goddard said.
However, chana futures on India's NCDEX market - taken by the pulse industry as a benchmark, and which tumbled in late July narrowly ahead of the Australia price plunge – renewed a decline this week, and on Thursday closed down 1.1% at 2,758 rupees per quintal for September delivery.
That took the contract's decline over the last month to 12.1%.