Mentha Oil Futures Likely To Recover

Mumbai: Mentha oil futures is set to see a minor recovery, after a sharp fall from Rs 580 per 10 kg to Rs 456 levels in the last few days.

From 1.25 lakh hectares planted in 2005-06, the area under mentha has gone up by 35-40 per cent in 2006-07. About 80-90 per cent of the cultivable area is in Uttar Pradesh, followed by Bihar, Punjab, Haryana and Himachal Pradesh.

The average yield is about 40-45 kg of oil an acre. Total mentha oil output this season is estimated at 33,000-35,000 tonnes, up by 30-40 per cent compared to last year’s production of 25,000 tonnes.

Unchanged Demand

Domestic and export consumption is expected to remain more or less at previous year’s level of around 8,000 and 14,000 tonnes.

India is the largest producer and exporter of mentha oil in the world, contributing 85 per cent of total production and rest comes from China, Brazil and US. India, which is one of the leading exporters, logs in about 12,000-14,000 tonnes annually.

In October, mentha oil futures tracked weak spot markets. The November delivery tumbled from Rs 520 level to Rs 470-471 levels due to lacklustre demand in spot market. During the same period last year, it was trading firmly in the range of 610-700 per kg.

Buyers keep away

Buyers are staying away from the market in anticipation of a further fall in prices because of higher supplies, which overtook demand.

The inventories at MCX-accredited warehouse are about 1,700 tonnes. It is around 133 tonnes in NCDEX warehouses.

Farmers and stockists are holding back their produce in anticipation of higher prices.

Rising rupee

Export orders have been delayed due to the rupee appreciation against dollar.

“If the trend reverses we can see emergence of export demand, which is likely to support the prices in the coming days irrespective of higher production. Otherwise, prices are likely to continue its downward trend. Now market is in indecisive stage,” said Harish Galipalli, head of research, Karvy Commodities.

“The immediate crucial support is seen at Rs 460 and then Rs 450 levels. Likewise, the resistance can be seen at Rs 490 and then Rs 500 levels,” he said.