Menthaoil yesterday settled up 0.52% at 906.5 on short covering amid lower level buying after prices seen under pressure as higher supplies in the physical market on increased arrivals pressured on prices. Sentiments weakened further due to higher production prospects, high stock levels and reports of better sowing. The total area under mentha crop is expected to increase this year as the commodity prices witnessed firm trend in the last year due to good demand from pharmaceutical industry. Production this year expected higher at more than 60,000 tons against 50,000 tons last year. Higher stock levels could pressurize prices in medium term. Heavy rains over last few days in UP have adversely affected the harvesting and could also lead to crop damage may impact future prices. Higher production estimates are also putting further pressure on the commodity movement. The area under mentha crop is expected to be higher at 2.10 lakh ha against last year's 1.75 lakh ha. Besides the new arrivals, the strong production estimates also propelled some stockiest selling from higher levels. 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. Technically market is under short covering as market has witnessed drop in open interest by -16.07% to settled at 2304 while prices up 4.7 rupee, now Menthaoil is getting support at 889.2 and below same could see a test of 871.8 level, And resistance is now likely to be seen at 918.9, a move above could see prices testing 931.2.

Trading Ideas:

Menthaoil trading range for the day is 873-932.4.

Menthaoil spot is at 982/-. Spot market is up by Rs.17/-.

Menthaoil gained on short covering amid lower level buying after prices seen under pressure as higher supplies on increased arrivals pressured on prices.

The total opening stocks of Mentha oil are expected to reach 13000-15000 tonnes in the next year.

Higher production estimates are putting pressure on the commodity movement.