Bumper arrivals hit mentha oil

Increasing arrivals and prevailing negligible demand have further weakened the mentha oil market. With futures slipping below the Rs 500 mark and spot all set to follow suit, market observers said that knock could be more severe.

At present, the arrivals are reported to be around 800 drums (each of 180 kg) in Uttar Pradesh (the main producer of mentha). "Next week, arrivals will double pushing the market further down," said Pinky Kumari, research associate with Angel Commodities.

"As more crushing (for extraction of oil from mentha leaves) come into full swing, arrivals can reach up to 1,500-2,000 drums a day," she added.

This year's production estimate of 32,000 tonnes, over 70 per cent than last year's 18,000 tonnes, has already infused a long-term bearish trend in the mentha oil market. Moreover, so far there have not been any substantial export enquiries which could bring some support to this free fall.

"In Chandausi, there is a supply of around 200 drums a day. Prices in the physical market are hovering at Rs 515 a kg which we see slipping to Rs 500 this month. Next month, it will be further weakened," said Bhuvnesh Kumar Varshney, a Chandausi-based trader.

Prevailing hot weather, a requisite for mentha crop is proving favourable. "If it rains, the fall in prices will stop," said Varshney. However, this is highly unlikely at least for another couple of weeks.