Menthaoil settled up 0.35% at 735.6 on tight stocks position in the physical market due to restricted arrivals from the major producing belts. Further, good demand from consuming industries in the spot market too supported mentha oil prices. Prices found strong support at these levels as demand started picking up from the Corporate sector. With arrivals too slowing down, traders are not ruling out more recovery for this commodity in the coming days.

Any rains in growing areas in UP could perk up prices even further. In Barabanki arrivals were reported at 250 Drums(1-drum-180kg), unchanged as compared to previous day's arrival. In Chandausi sources reported arrivals at 15 Drums(1-drum-180kg), lower by 20 Drums(1-drum-180kg) from previous day's arrivals. As per the market sources, the total sowing acreage of mentha oil is expected to decline by 20-25% in the current year. Sources added that the total production of mentha oil in the current year is likely to be around 35-36 thousand tonnes against the previous year of 50 thousand tonnes.

The prices will also be well supported by strong export demand in local mandies. Sources mentioned that the total exports of mentha oil for the full year April 1, 2013 to March 31,2014 are likely to surpass the previous record of 20,500 tonne , ie. reported in 2008. Meanwhile Monsoon rainfall till now has been 63% less than average in central India and 47% less than normal in north-west India, according to the IMD. Technically market is under short covering as market has witnessed drop in open interest by -1.94% to settled at 5817, now Menthaoil is getting support at 730.8 and below same could see a test of 725.9 level, And resistance is now likely to be seen at 743.3, a move above could see prices testing 750.9.

Trading Ideas:

Menthaoil trading range for the day is 725.9-750.9.

Menthaoil spot is at 821/-. Spot market is down by Rs. 7/-.

Mentha oil prices ended with gains on tight stocks position in the physical market due to restricted arrivals from the major producing belts.

With arrivals too slowing down, traders are not ruling out more recovery for this commodity in the coming days.

Any rains in growing areas in UP could perk up prices even further.