Commodity Trading Tips for Menthaoil by KediaCommodity

Ajay Kumar Kedia 24 September 2013

Menthaoil yesterday settled down -0.55% at 868.3 on expectations of increase in supply in the coming weeks from major Mentha growing areas. Market sources suggested that strong demand is mainly on the account of possibility of poor sowing acreage in the next season as a weak price trend in the current year will divert the farmer's interest towards other crops. This will also instigate the fresh buying of long term investors from lower levels. The total daily arrivals of mentha oil have also been reduced to 400-500 drums against 800-900 reported at the beginning of the month due to restricted selling by farmers at lower levels. Mentha oil Production this year expected higher at more than 60000 tons versus 50000 tons last year due to higher demand from pharmaceutical industries. The area under crop this year expected higher at 2.10 lakh hectares versus 1.75 lakh hectares last year. 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. Technically market is under long liquidation as market has witnessed drop in open interest by -5.19% to settled at 3727 while prices down -4.8 rupee, now Menthaoil is getting support at 861.9 and below same could see a test of 855.6 level, And resistance is now likely to be seen at 876.3, a move above could see prices testing 884.4.