Lower availability, along with renewed demand from abroad, has been fuelling mentha oil prices for six months.
The price of the commodity, used largely as an ingredient in the pharma and fast moving consumer goods industries, shot up by 60 per cent in the past six months, to set a record of Rs 1,608 a kg in the spot market.
On the Multi Commodity Exchange (MCX), the commodity for delivery in the near-month also surged proportionately, to set a record of Rs 1,620 a kg on January 16.
“Mentha oil prices are increasing due to low output estimates by the ministry of agriculture. Since export demand is high, prices are likely to remain firm through this season,” said Girish Gupta, managing director of G K Proteins & Chemicals, a Chandousi-based exporter.
The ministry of agriculture had cut production estimates to 36,000 tonnes due to crop failure in major producing centres, including Uttar Pradesh, the largest producer. The ministry had earlier estimated the overall output at 42,000 tonnes. This year’s output, however, is estimated to remain up by 8,000 tonnes from last year’s overall production of 28,000 tonnes.
Gupta further said export markets remained firm this year, unlike previous years, as its use was extended to many new areas. Mentha oil, its constituents and derivatives are used in the food, pharmaceutical, perfume and flavouring industries. According to Nalini Rao, an analyst with Angel Broking, carryover stock from the last season is almost exhausted. Therefore, arrivals in the spot benchmark Chandousi market remained very low. Mentha is sown in February and harvested in July.
According to the latest release from the Spice Board of India, mint exports during April-October were 9,150 tonnes, down almost four per cent from last year. Overall shipments of mint products marginally declined to 10,250 tonnes in April-November from 10,950 tonnes last year. Against the export target of 17,750 tonnes, Indian traders have achieved only 58 per cent in the first eight months.
Indian exporters are fetching higher prices from abroad this year. As compared to the average realisation of Rs 852.1 a kg during the first eight months of the previous financial year, traders got Rs 1,372.5 a kg this year. On the basis of last year’s price, the government had set an export target of Rs 1,650 crore in value terms, of which 85 per cent has already been achieved in the first eight months of the current year.
