Technically Mentha Oil market is under fresh buying as market has witnessed gain in open interest by 3.66% to settled at 1443 while prices up 4.3 rupees.
Now MCX Mentha Oil is getting support at 1260.5 and below same could see a test of 1246.9 levels, and resistance is now likely to be seen at 1284.3, a move above could see prices testing 1294.5.
Mentha Oil on MCX settled up by 0.34% at 1274.1 on short covering after prices dropped as pressure seen after the Bihar state government has completely banned all types of pan masala. Currently, this ban has been imposed for 12 months.
There were estimations of a 20-25% rise in sowing in 2019 versus last year. It is likely to touch ~3 lakh ha—as per Central Institute of Medicinal and Aromatic Plants (CIMAP).It should be noted that this year’s production expectation of 38500- 39000 MT stood slightly above the average production of 36,968 MT productions seen in between 2013 and 2018.
Therefore expectations of a significant jump in production over last year due to is ruled out. Due to improving exports prospects, estimates for ending stocks has been reduced even lower than previous year.The output has not risen in past few years with India producing ~80% of global production and exporting ~75% of its output.Export demand of oil in global market is likely to be improved due to recovery in currency which is supportive for prices.
The surge in output is likely due to buoyancy in planting intentions, not only in the traditional pockets of Uttar Pradesh and Bihar in recent days, but also in Madhya Pradesh. Mentha sowing may witness a huge jump this year because of high returns farmers experienced the whole of last year. Mentha oil spot at Sambhal closed at 1415.50 per 1kg. Spot prices was up by Rs.2.40/-.
--Mentha Oil trading range for the day is 1260.2-1295.4.
--Mentha Oil spot at Sambhal closed at 1417.90 per 1kg. Spot prices was down by Rs.0.20/-.
--Mentha Oil settled up as low level buying seen as demand season starts in August.
--Due to improving exports prospects, estimates for ending stocks has been reduced even lower than previous year.
--The surge in output is likely due to buoyancy in planting intentions, not only in the traditional pockets of Uttar Pradesh and Bihar in recent days.
Courtesy: Kedia Commodities