After hitting its recent low by the end of June, mentha oil price turned around to record over 16 per cent jump in July following reports of crop damage in major plant growing regions including Uttar Pradesh.
Obtained primarily from pepper mint plant “mentha piperita” for use largely in pharmaceutical, food safety, culinary, cosmetics, insecticides, etc., mentha oil hit its lowest of the recent past in June to trade at Rs 905 a kg. But the commodity with pungent odour recovered to trade currently at Rs 1,056 a kg on Wednesday.
Sudden spurt in the prices of mentha oil would raise cost of production for consumers industries which may prompt producers to revise prices of their final product upwards. Interestingly, however, mentha oil being a small component of entire basket of raw materials, its consumer industries might absorb price rise for some time.
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“Mentha has gone under speculators’ grip as such a high volatility in its prices was not seen in the past. Traders working in futures exchanges are not linked with physical markets. Amid fear of lower output this year and rising demand, stockists have started hoarding of mentha oil to manipulate price in future,” said Phul Prakash, former president of Uttar Pradesh Mentha Oil Industries Association and a physical trader and exporter of mentha oil based in Chandausi, Uttar Pradesh.
Initially, India’s mentha oil output was estimated to remain lower this year from 32,000 tonnes produced during last year. But, rainfalls later improved overall scenario that got worsened with scorching heat waves in May. Hence, overall mentha oil output for 2016-17 is now revised upwards at 34,000 tonnes.
“Bullish sentiment prevails in mentha oil due to rising demand and falling arrivals the physical markets. Currently, mentha crop is been harvested and reports of heavy rainfall in the major growing areas in Uttar Pradesh affected arrivals resulting into fear of crop damage for October harvest,” said Naveen Mathur, Associate Director (commodities and currencies), Angel Broking. Menthol is crystalline substance with characteristics of pungent odour, derived from the mentha oil of the pepper mint plant “mentha piperita” which is largely grown in Chandausi, Sambha, Barabank, Bareilly and Rampur areas of Uttar Pradesh.
India meets around 80 per cent of the world natural menthol demand with its use in pharmaceutical, food safety, culinary, cosmetics, insecticides, scent and aromatherapy.
Traders estimate 20 per cent decline in arrivals over the last three weeks. Interestingly, India possesses massive carryover stocks from the last year which may cap price rise.
“While upside will be capped as the new crop is likely to be above previous year’s crop size by 10 per cent. The weather was favorable last month due to which harvest was smooth, and had weighed over price levels. There are expectations of export demand to pick up,” said Ajay Kedia, Managing Director, Kedia Commodity.
Meanwhile, mint product exports have declined substantially from the export basket by 18 per cent in terms of volume and 4 per cent in terms of value year-on-year. Exports of mint products stood at 21,150 tonne (worth Rs 2,577.59 crore) in FY 2016 as against 25,750 tonne (valued at Rs 2,689.25 crore) in FY 2015.
According to the state-run Spices Board, India is one of the world’s largest producers of mint oil and exports nearly 80 per cent of its produce.
Trade sources, however, believe that when mentha oil price rose to over Rs 2200 a kg in 2012, lots of consumer industries in developed countries produced synthetic mentha oil. With the life span of just five years for synthetic mentha oil, the quantity would be disposed off into the market in near term. But, the demand of natural mentha oil would turn to India after exhausting of synthetic one.
