Menthaoil yesterday settled up 0.51% at 880.2 on account of dwindling supply of the commodity in the spot markets. Further, increased industrial demand in the spot market against lower arrivals from Chandausi in Uttar Pradesh also supported the prices. However, the prices could fall again due to higher production prospects and reports of better sowing. Besides the new arrivals, strong production estimates will instigate further stockiest selling in local mandies. As per latest data 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. The total opening stocks of Mentha oil are estimated at 13000-15000 tonnes for the current year. This may encourage stockiest liquidation at high levels. Steady demand was mainly seen in the wake of anticipation of poor sowing acreage in the season as a weak price trend in the current year will divert the farmer's interest towards other crops. Therefore, low prices of mentha oil encourage the long term investor's demand in local mandies. Technically market is under short covering as market has witnessed drop in open interest by -1.5% to settled at 4142 while prices up 4.5 rupee, now Menthaoil is getting support at 869.8 and below same could see a test of 859.3 level, And resistance is now likely to be seen at 889.4, a move above could see prices testing 898.5.

Trading Ideas:

Menthaoil trading range for the day is 859.3-898.5.

Menthaoil spot is at 975/-. Spot market is up by Rs. 19/-.

Mentha oil ended with gains on account of dwindling supply of the commodity in the spot markets.

Increased industrial demand in the spot market against lower arrivals from Chandausi in Uttar Pradesh also supported the prices

Besides the new arrivals, strong production estimates will instigate further stockiest selling in local mandies.