Menthaoil settled up by 2% at 669.00 after spot market gained by Rs. 16 on rising domestic and export demand amidst restricted supplies from Chandausi in Uttar Pradesh, mainly influenced mentha oil prices at futures trade here. While since last week prices where under pressure as speculators indulged in reducing positions amidst falling demand from consuming industries in the spot market. Besides, ample stocks position in the physical market on increased arrivals from Chandausi in Uttar Pradesh too added pressure on mentha oil.

As of now higher side will capped as higher stocks in mandis kept trend weak as traders do however anticipate some pick up in exports in coming days could support the rates at these lower levels. Further, ample stocks position in the physical market due to increased arrivals from producing belts too added pressure on mentha oil prices. Arrivals were reported at 80 Drums, unchanged as compared to previous day's arrival. While arrivals in Barabanki Market were at 250 Drums, up by 150 Drums from previous trading day. However, lower production in India is likely to decline by 20% due to lower plantings of the aromatic herb on falling prices in the past two years, capped some losses in mentha oil prices to some extent.

Sources estimate the area under mentha planting at 17,500 hectares this season, 20 per cent down, resulting in a proportionate fall in mentha oil production this year. The price has been subdued for a while due to a ban on gutkha and prices will continue to remain subdued going ahead. Production of synthetic mentha oil on a global level has increased, which has also caused demand to remain on the lower side. Technically market is under short covering as market has witnessed drop in open interest by -5.93% to settled at 8757 while prices up 13.1 rupee, now Menthaoil is getting support at 655.9 and below same could see a test of 642.9 level, And resistance is now likely to be seen at 678.2, a move above could see prices testing 687.5.

Trading Ideas:

Menthaoil trading range for the day is 643.3-687.9.

Menthaoil spot is at 756/-. Spot market is up by Rs. 8/-.

Menthaoil rallied up by 2% on rising domestic and export demand amidst restricted supplies from Chandausi in UP.

Ample stocks position in the physical market on increased arrivals from Chandausi too added pressure on mentha oil.

Area under sowing is at 17,500 hectares, 20% down, resulting in a proportionate fall in mentha oil production this year.