Technically Mentha Oil market is under short covering as market has witnessed drop in open interest by 4.26% to settled at 360 while prices up 11.3 rupees.
Now MCX Mentha Oil is getting support at 1071.2 and below same could see a test of 1045.6 levels, and resistance is now likely to be seen at 1111.2, a move above could see prices testing 1125.6.
Mentha Oil yesterday settled up by 1.04% at 1096.8 on short covering after prices dropped due to low demand and expectation of a rise in acreage this season. There were expectations of higher area under cultivation for crop year 2020-21.
Currently, rains will not have any major impact on the crop. However, if it continues to rain post March, then crop prospects in the coming season may improve.The corona virus case is getting prolonged, which has severely affected the demand for agri commodities.
The demand for agri commodities like mentha in China has stalled. At the same time, the yield of mentha is expected to be high this time too, due to this, traders are not taking fresh positions in mentha.As prices have fallen sharply, arrivals would decline in the physical market.
Mentha crop is likely to rise in 2020-21 on expectations of the sowing area to increase for the new season. In recent years, besides traditional growers of UP, farmers in Madhya Pradesh have also started cultivating mentha crops due to better returns.
Market sources expect acreage in the state to increase further. Although prices have fallen substantially, traditional growers of UP would stick with mentha cultivation, as returns from the mint crop is almost double the cost of production.Expectations of a bumper mentha crop for the second consecutive year is likely to keep mentha under pressure.
--Mentha Oil trading range for the day is 1045.6-1125.6.
--Mentha Oil spot at Sambhal closed below 1200 level as demand concerns.
--Mentha Oil gained on short covering after prices dropped due to low demand and expectation of a rise in acreage this season.
--There were expectations of higher area under cultivation for crop year 2020-21.
--At present, arrivals have declined as stockists are reluctant to sell their stocks at low prices.
Courtesy: Kedia Commodities