To tame the rising price trend of mentha oil futures, leading commodity bourse MCX today hiked the deposit money (margin) by 20 per cent on investors keen to participate in the futures trading of the commodity.
After the hike, the total deposit money that an investor needs to deposit with the exchange for taking either buy or sell position in the mentha oil contracts, stands at around 26 per cent of the total value of the commodity.
"Additional margin of 10 per cent will be levied on buy and sell side of mentha oil contracts with effect from today," an MCX circular said.
Mentha oil contracts are largely traded on the MCX platform and prices of the commodity have risen sharply in the last three months owing to supply-demand mismatch, an analyst with commodity brokerage firm Karvy Comtrade said.
According to trade estimates, production of mentha oil used in the making of soaps and other, is projected to be lower by 28 per cent at 25,000 tonnes. Last year, the output was 35,000 tonnes.
"Higher demand in winter season and lower production estimates are contributing for the price rally in the mentha oil contracts," the analyst said.
At the MCX counter, the most-active mentha oil contract, which is slated to mature this month-end, made a high of Rs 978.50 per kg last week. The same contract was trading below Rs 800 kg in August.
Similarly, the November contract of mentha oil is also trading firm at Rs 977 per kg. At another leading bourse NCDEX, too, mentha oil future prices are ruling firm above Rs 1,000 per kg.