Below is the Views On Mentha Oil Prices to Further Plunge Amid Higher Crop Forecasts By Mr. Sumeet Bagadia, Choice Broking
Mentha Oil Prices to Further Plunge Amid Higher Crop Forecasts
MCX Mentha Oil Futures has been sliding since Mid of April month as there have been reports of higher sowing in Uttar Pradesh this year (2020-21) compared to the previous year (2019-20). Moreover, peak global lockdown phase during that period had also weakened the exports from India. Domestic market demand had also been limited amid the nationwide lockdown phase. Later in the months of May and June, MCX Mentha oil futures had further declined with positive pre-monsoon reports by IMD (Indian Meteorological Department) and later normal rainfall witnessed in the northern parts of India. 80% of the Mentha Oil is sown and grown in Uttar Pradesh, while the rest 20%, sowing and growth is witnessed in the states of Haryana, Punjab and Himachal Pradesh.
Looking ahead, we expect MCX Mentha Oil futures to trade bearish as the peak harvesting is expected to begin in the northern parts of Uttar Pradesh in the coming weeks. Earlier in the month of June, harvesting had been delayed due to the lockdown phase and lack of labour activities, however, with the lockdown having to be eased in the rural and semi urban regions of India, cutting of the Mentha oil crop phase wise has already begun in the above states. Moreover, the domestic demand from pharmaceutical companies which is usually higher during the winter season is reported lower at this point of the year. Furthermore, the import demand from major importing countries such as China, the U.S., Netherlands, Germany, U.K., France, Brazil, Japan and Singapore is relatively lower amid the worries of further rise in covid-19 cases worldwide. Though the USDINR rate is still trading at the lower levels and Mentha oil commodity being export-oriented; the exports from India are still lagging behind in the past couple of weeks and could possibly remain lower in the month ahead. The major export varieties include the Japanese mint oil (derived from Mentha arvensis), peppermint oil (Mentha Piperita), dementholised Japanese mint oil, Spearmint (Mentha spicata), Water mint oil (Mentha Aquatica), horsemint oil (Mentha Sylvestris), and Bergemont oil (Mentha citrate). In addition, the weather conditions play an important role during the time of harvesting and the incidence of cold waves and heavy rains, are usually harmful during leaf formation. However, that is not the case in the state of Uttar Pradesh in the current period and we expecting a good crop this year compared with the previous year. So far, the actual production data has not been released yet, however, the domestic traders' sentiment indicates for 10-15% incline in production of Me nth a Oil this year (2020-21 ), compared with the previous year (2019-20). Stock worries in the domestic markets are currently lower as last year's (2019-20) stocks are reported around 10,000 to 12000 tonnes, higher compared to 7000-8000 tonnes of the preceding year (2018-19)
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