DELHI (Commoditiescontrol) - Mentha oil witnessed correction over last three sessions in the domestic market after strong surge of 16 percent until last week of this month. In order to assess the market trend ahead commoditiescontrol spoke with trade experts and following are their views.
An official with private research agency on anonymity said mentha oil acreage jumped 21 percent this year compared to last year. According to him mentha oil output for the season 2016-17 likely to be around 35,150 tonnes, while carryover stock is at 8,000 tonnes from previous crop. The total supply for the season hence expected to be around 43,150 tonnes.
India has produced 29,000 tonnes mentha oil in 2015-16 and opening stock was guessed at 15,000 with total seasonal availability at 44,000 tonnes, he added.
He said supply for the current season total availability would be around similar to last year. However, expecting better prices for current year on expectation of improved export data.
He further added China imported 35 percent less mentha oil in 2015-16 as it had sufficient stocks. However, with better current export demand prices likely to stay positive ahead.
Mentha oil arrivals were limited in the market presently and most of the stocks were held by farmers only, as they are reluctant to sell at current rate and waiting for increment in mentha oil prices, he said.
According to him exporters bought around 40,000 drums (180Kg each) earlier in May 15-July 15, and 80 percent from it was shipped to overseas. Exporters are now having low stocks. Stocks lying on MCX godowns is around 16,000 tonnes and with thin supplies mentha could find support. About synthetic mentha oil availability, he said "BASF in Germany and Takasaki in Japan are the major synthetic manufacturers and rise in its production would surely weigh natural mentha oil, but lower natural mentha oil prices may attract traders.
“Mentha oil prices likely to trade in narrow range as per current supply-demand fundamentals,” he noted.
Ex-President of Essential Oil Association Jugal Kishore expects this year mentha oil production between 35,000-36,000 tonnes. He estimated last year carryover at 6,000 tonnes.
He said that India's market share in the world is around 25 percent, while other countries accounts 75 percent. Jugal Kishore noted that there is least possibility of sharp rally in prices due to presence of 10,000 tonnes of synthetic mentha oil in the country. However, he alleged that speculators are eyeing to raise prices, so that they can short sell at higher level, hence Kishore advices small traders to take position on futures wisely.
“Mentha oil may rise on speculation against fundamentals,” according to him.
He said demand is weak at present and hence surge in prices unlikely due to slow domestic and export demand.
Bhuvnesh Varshney, Director, Hindustan Mint and Agro Product put his 2015-16 mentha oil production at 32,000-33,000 tonnes with expected opening stock between 5,000-10,000 tonnes.
Supplies are thin in the spot market as farmers are holding stocks anticipating better rates. Poor supply may push mentha oil prices by Rs 100-150/Kg in the near term.
Anurag Rastogi, a mentha oil trader based in Sambhal said supply is sluggish in the spot market at present. He projected 2016-17 mentha oil production in the range of 35,000-37,000 tonnes against 32,000-35,000 tonnes last year. Low carry forward stocks and empty pipeline may support mentha oil in the near term.
He forecast "Mentha oil may test 1200 level on Multi Commodity Exchange Ltd (MCX) going forward, while important support will be at 930, whereas may rise to 1,300 in the spot market.
(By Commoditiescontrol Bureau; +91-22-40015533)