Mentha oil prices are expected to fall by the end of this month when fresh arrivals hit the spot markets. Arrival season for mentha oil reaches its peak during July-August, but, some arrivals will start by May-end in major spot markets of Uttar Pradesh.
Also, this year the acreage under mentha increased as production was poor last year which caused commodity’s price to reach all-time high last year.
Mentha prices have been falling since the last two months on expectations of better production. In futures also, prices dipped 30 per cent and closed at Rs 932 on Thursday after hitting an all-time high of Rs 1,311.30 on March 21. While mentha oil, in the spot market was at Rs 1,248.1 a kg, which has now come down to Rs 1,089 a kg. Mentha oil on the spot market went to all-time high of Rs 1,407.7 a kg in November last year.
“Current arrivals in the spot market is 200 drums (1 drum = 360 litres) and arrivals are expected to reach 600-700 drums by May-end,” said Ajay Kedia of Kedia Commodities.
The total sowing acreage of mentha crop in the state was about 175,000 hectares, which is about 45,000 hectares more than the previous year.
In the current year, the total production of mentha oil is likely to be augmented by 15 per cent to 42,000 tonnes on the account of steady sowing progress of mentha oil in Uttar Pradesh. Sowing of mentha starts in March. On May 11, total stock of mentha oil at MCX-monitored warehouses at Chandausi was 69,445 kg of which 43,896 kg is physical stock and 65,549 is demat stock. At Barabanki, the total stock was 161,957 kg of which, physical stock accounted for 4,008 and demat stock was 157,948 kg.
After a continuous fall in prices in the last two-three days, some short covering and increased demand at lower rates kept the sentiments bullish. However, better production estimates are pressurising the sentiments as well as prices, said Ajay Kedia.
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Sowing area across UP is likely to touch 248,000 ha. Production is expected to be 7.7 million tonnes, according to the UP Horticultural Department. From 1 ha, 100 litres of mentha oil can be extracted. Total arrivals in all the major mandies were reported steady at around 200 drums on Thursday. Also, the export demand for mentha oil is diminishing which is causing a fall in the price of mentha oil. “There are no major export orders which is causing prices of the commodity to fall. By May end, mentha oil on MCX may fall by 3.5-4 per cent and reach Rs 900 a kg,” said Vibhu Ratandhara, associate vice-president of Bonanza Commodities.
“Activity on the spot market will improve in the next 15 to 20 days as fresh arrivals will start to trickle into the market,” said Dharmendra Kumar, a trader at Chandausi spot market.