MCX May mentha oil seen weak on high output

May mentha oil contract on the Multi Commodity Exchange is seen down Rs 10-15 per kg in the next two to three trading sessions on low demand and expectation of a better output this year, dealers and analysts said. The contract is currently trading at Rs 447.

A Bangalore-based analyst said mentha oil output in the current year is expected to be substantially higher that last year, provided the weather remains conducive till harvest.

Mentha crop is usually sown in March and harvested from May-end onwards. Last year's production is estimated at about 21,000 tonne.

Dealers said the demand is also low as industrial buyers are deferring purchases, waiting for prices to fall after the new harvest.

A Delhi-based dealer said not much volatility is expected in the May contract in the next few days as volumes are usually thin during April-May owing to poor demand from industrial buyers.

He said scattered retail and export demand may, however, lead to partial recovery in the MCX May contract to Rs 460 per kg next month.

Though arrivals in the spot markets are extremely thin, MCX warehouses still have over 2,706 tonne of mentha oil.

So, if some demand was to emerge, industrial buyers would turn to the exchange for deliveries, which could push up the May contract, the dealer said.