Menthaoil yesterday settled up 0.95% at 993.7 tracking a firm trend at spot market on strong industrial and export demand. Sentiments improved further due to tight stock positions in the physical market due to restricted arrivals from producing belts. However, the sentiments may remain under pressure due to higher production prospects and reports of better sowing. Short term some more dips are not ruled out but with the recent rains reportedly affecting the harvesting process. As per market sources , heavy rainfall in major mentha growing areas such as Rampur , Sambhal and Moradabad might lead to serious damage to the standing mentha crop. Moreover, this might also reduce the overall oil recovery from the crop. Besides the new arrivals, the strong production estimates also propelled some stockiest selling from higher levels. The total mentha oil production is expected to be in the range of 52000-55000 tonnes in the current year, up almost 10-12% from the last year. This is mainly due to the better price realization and favourable crop conditions. Moreover, the total opening stocks of Mentha oil are expected to reach 13000-15000 tonnes in the next year. This may also convene the sufficient supplies of mentha oil next year. Technically market is under short covering as market has witnessed drop in open interest by -2.14% to settled at 3937 while prices up 9.4 rupee, now Menthaoil is getting support at 984 and below same could see a test of 974.4 level, And resistance is now likely to be seen at 1004, a move above could see prices testing 1014.4.

Trading Ideas:

Menthaoil spot is at 1085/-. Spot market is down by Rs. 3/-.

Mentha oil ended with gains tracking a firm trend at spot market on strong industrial and export demand.

Sentiments improved further due to tight stock positions in the physical market due to restricted arrivals from producing belts.

The total mentha oil production is expected to be in the range of 52000-55000 tonnes in the current year.

Higher arrivals of the new crop (~250-300 drums) in mandis from harvesting have been keeping pressure on the market sentiments.