Menthaoil gained on low level buying

Mentha oil yesterday settled up by 0.36% at 883.1 on low-level buying after prices dropped amid a rise in supplies of new crops. Supplies have increased in Uttar Pradesh and Bihar as harvesting activities have picked up. Production prospects have improved with rising yield supported by favourable weather conditions. Moreover, reports of slack export of menthol will put pressure on prices. Rising menthol imports, as well as China’s limited purchasing, will put pressure on pricing. 

Mentha exports during Apr-May 2023, dropped by 51.60 per cent to 183.98 tonnes as compared to 380.12 tonnes exported during Apr-May 2022. In May 2023 around 86.13 tonnes of Mentha was exported as against 97.85 tonnes in April 2023 showing a drop of 13.60%. In May 2023 around 86.13 tonnes of Mentha was exported as against 209.90 tonnes in May 2022 showing a drop of 58.96%. Many states have seen gutkha and pan masala ban which have seen a lower demand from the pan masala industry. The production of Mentha oil was historically high in 2020-21, the area remained almost similar last year but the yields were lower which affected the production. In the current year, production is to fall to around 46,238 MT due to a sharp fall in area and loss in yields following severe summer heat. which will come close to 14% down in the year 20-21. 

Technically market is under short covering as the market has witnessed a drop in open interest by -0.11% to settle at 930 while prices are up 3.2 rupees, now Mentha oil is getting support at 878.5 and below same could see a test of 873.9 levels, and resistance is now likely to be seen at 888.2, a move above could see prices testing 893.3.