With the ban on gutkha in certain states in India coupled with low pharmaceutical demand for mentha oil is currently dragging down the price of mentha oil.
Winter demand for mentha oil is also currently down, which is weighing down on the commodity.
Since September 1, mentha oil has declined by 14.1% to Rs 1,210.80 per kilogram.
Mentha oil is obtained by steam distillation of leaves and other parts of the mentha plant and demand for mentha oil usually increases in winter, especially in November and December, due to its medicinal uses.
Overall trading activities remained low but traders expect pick up in demand in the coming weeks better production prospects have been keeping overall sentiments weak.
Production this year likely to exceed 50,000 tonnes as per sources. Last year production of mentha oil was pegged at 38,000 tonnes last year
Higher sowing activities due to the high rates obtained by farmers last year resulted in higher production this year.
In Uttar Pradesh, the largest producer of mentha oil in India, the area has been forecast to rise to 2.10 lakh ha compared to 1.75 lakh ha.
“Higher stocks in the mandis from higher arrivals also kept pressure on the market sentiments. However traders also expect the demand to rise over next few months once the prices stabilise at the lower levels as the arrivals get over,” said Ajay Kedia, MD of Kedia Commodities, a Mumbai based broking firm.