Menthaoil October contract gained Rs 29.9 and settled at Rs 1227.5 on short covering tracking firm spot demand.  Sources expect some more corrections as the ban would lower the domestic demand. Overall trading activities remained low but traders expect pick up in demand in the coming weeks. Better production prospects have been keeping overall sentiments weak. Production this year likely to exceed 50000 tonnes as per sources vs 38000 tonnes last year. Higher sowing activities due to the high rates obtained by farmers last year resulted in higher production this year. In Uttar Pradesh, the largest producer of Mentha Oil in India, the area has been forecast to rise to 2.10 lakh ha vs 1.75 lakh ha. Higher stocks in the mandis from higher arrivals also kept pressure on the market sentiments. The total arrivals stood at 500-550 drums. On 24th September total stock of mentha oil at MCX-monitored warehouses at Chandausi was 1, 13, 250 kg of which 96,712 kg was physical stock and demat stock was 16, 538 kg. At Barabanki, the total stock was 23, 69, 384 kg of which, physical stock accounted for 19, 26,501 and demat stock was 4, 42, 883 kg. The contract made intraday low of Rs 1192.2 a kg and high of Rs 1232 a kg with the volume of 5655 and total open interest for the same contact was at 4592.Now support for the menthol is seen at 1202.5 and below could see a test of 1177.4. Resistance is now likely to be seen at 1242.3, a move above could see prices testing 1257.

Trading Ideas:

Mentha oil trading range for the day is 1177.4-1257.

Menthaoil spot is at 1407/-.Spot market is up by Rs.15/-.

Mentha oil ended with good gains on short covering tracking firm spot demand.

Sources expect some more corrections as the ban would lower the domestic demand.

Higher sowing activities due to the high rates obtained by farmers last year resulted in higher production this year.