Menthaoil on MCX settled up 0.39% at 948.2 amid rise in demand in the domestic spot market. Further, tight stocks position on restricted supplies from producing regions, too supported mentha oil prices. However, some gains were capped on the speculation that the area under cultivation can increase this year resulting good production. A better price recovery in mentha oil is expected to boost production of the crop by 12% this year. A large number of small and marginal farmers from Uttar Pradesh, Himachal Pradesh, Haryana and other places sowed mentha in January. India exported 21,150 metric tonnes of mentha and allied products, valued at Rs 2,577.59 crore in FY16, according to the Spices Board of India. This was 15.87% in value terms of the total spices exported. Sentimental weakness will continious for mentha demand as the key consumption sector (Tobacco products) is witnesing slow down in demand. Prices had been under pressure since March after Yogi Adityanath, the Chief Minister of Uttar Pradesh, has banned paan chewing and gutka or tobacco in all government offices in the state. Trade sources estimate that total area under Mentha planting has dropped by 20% to 1.75 lakh ha this season resulting into a proportionate fall in Mentha oil production this year. Technically market is under short covering as market has witnessed drop in open interest by -4.94% to settled at 1943 while prices up 3.7 rupees, now Menthaoil is getting support at 943.8 and below same could see a test of 939.5 level, And resistance is now likely to be seen at 953.2, a move above could see prices testing 958.3.

Trading Ideas:

Menthaoil trading range for the day is 939.5-958.3.

Mentha oil spot at Sambhal closed at 1108.50 per 1kg. Spot prices was up by Rs. 5.00/-.

Mentha oil prices gained amid rise in demand in the domestic spot market.

Further, tight stocks position on restricted supplies from producing regions, too supported mentha oil prices.

India exported 21,150 metric tonnes of mentha and allied products, valued at Rs 2,577.59 crore in FY16.