Mentha oil prices likely to go up in winter

Higher demand during winters is likely to spur mentha oil prices from November, traders and analysts said on Wednesday. The prices, however, are expected to remain depressed in October due to few export orders, they said.

"Though mentha oil prices are seen weak till October-end, they are likely to spurt by November as the demand is seen picking up in the domestic as well as the export markets," said Anurag Rastogi, a trader in Sambal, Uttar Pradesh.

India is the largest producer of mentha oil in the world and exports nearly 80 per cent of its total produce to Argentina, Brazil, China, France, Germany, Japan, UK and the US.Rastogi said the demand for mentha oil increased during winters as the commodity is used in a number of cold-relieving medications.

Mentha oil is a key ingredient in sore throat lozenges, and pain and cold balms.

Higher consumption of mentha oil products during winters was likely to push mentha oil prices to about Rs 450-500 a kg from the current level of around Rs 430 , said K R Rahaman, an analyst with Investment Leasing and Financial Services Ltd's commodity brokerage, Investsmart.

Export orders are expected to rise substantially by the year-end, which can further lift prices to Rs 600 a kg by the end of December, he said.

"By December, the global demand for the commodity would have increased but stocks would be low as the crop is harvested once a year during July-August," Rahaman said.

In the near-term, mentha oil prices are seen weak due to low domestic and export demand, he said.

Jugal Kishore, president of Essential Oils Association said farmers had already offloaded nearly 50 per cent of the total produce of 15,000 tonne this year in the spot markets, which was keeping prices low. Besides, there have been no major export orders so far, he said.

"There is a supply glut in the spot markets and most participants expect prices to decline further in the next 10-15 days," he said.

A trader based in Chandausi, Uttar Pradesh, said industries are purchasing just enough to meet their day-to-day requirements as they are waiting for prices to drop to about Rs 400 a kg by the month-end to make bulk purchases.

October mentha oil contract on the Multi Commodity Exchange (MCX) today closed at Rs 425.80 per kg, down Rs 2.80 over Tuesday. In the spot markets of Sambal and Chandausi, they quoted Rs 430 and Rs 433, respectively.

Sambal, Chandausi, Badaun and Barbanki,all in Uttar Pradesh, are the key mentha oil spot markets in the country.

Rahaman said the outlook for MCX October mentha oil was bearish and prices were expected to trade in the range of Rs 415-530 per kg during the coming week.