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Chickpea prices extend 'unabated surge'. But will it last?

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Chickpeas underlined their status as one of the best-performing agricultural commodities this year, in price terms, by topping Aus$800 a tonne in Australia, and hitting their highest since 2012 in India.

Chickpea prices "continue their unabated surge", hitting Aus$825 a tonne in the Australian export market, and $800 a tonne as delivered to packers in Darling Downs, Queesland, Pentag Nidera said.

"That's up Aus$60 per tonne week on week and Aus$160 over the last month," the broker said.

The rise reflected purchases by buyers in India, who "continue to scramble to get cover" for a pulse which represents a food staple in the country, but of which domestic production has fallen by as much as 20% this season.

Besides a drop in sowings - a reflection of relatively weak prices and last year's under-par monsoon – Indian production was also hit by unseasonal rains which have damaged the country's wheat output prospects too.

In India, May futures in chickpeas, or chana, touched 4,627 rupees per quintal this week, the highest on a spot contract basis since November 2012.

Correction ahead?

However, Queensland-based Pentag cautioned farmers against overplaying their hand, cautioning over the potential for a reversal in prices ahead.

Chickpeas can be substituted in some uses, notably in the manufacture of "besan" flour, by other pulses, giving buyers some options.

Meanwhile, the high chickpea prices, at times of depressed values of many other crops, look like spurring higher plantings in both Australia and India, which could spur a large recovery in supplies over 2015-16.

"One day, the balance between buyers and sellers will shift and the market dynamic will quickly change," Pentag said.

"Current chickpea prices are very high," potentially at a record top, and "when the bullish tone ot eh market comes to an end, buyers will be hard to find".

'Pretty traumatic'

Australian farmers need only go look back to 2013 for evidence of the damage of a fallout in the chickpea market, when a market surplus prompted default on chickpea contracts, leaving both farmers and traders nursing large losses.

"We saw some significant defaults," said Pentag, terming them "pretty traumatic times".

In the two seasons after 2012-13, Australian chickpea sowings plunged by more than one-quarter, reaching 425,000 hectares in 2014-15.

By Mike Verdin

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