Menthaoil yesterday settled up 1.58% at 866 tracking the surge in the demand in spot market. The prices found further support from tight stocks position in the physical market due to restricted arrivals from producing belts. Meanwhile, the weakness in the Indian rupee has made Indian Mentha oil competitive in the global market. However, the prices could fall again due to higher production prospects and reports of better sowing. Traders reportedly waited for dips before initiating fresh demand in mandis. Lack of strong demand have been keeping pressure on the market sentiments. Traders however anticipate demand to rise moderately at these lower levels. India's production of mentha oil may touch 60000 tons this year. Area under crop may touch 2.10 lakh ha vs 1.75 lakh ha last year. Besides the new arrivals, strong production estimates will instigate further stockiest selling in local mandies. As per latest data 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. The total opening stocks of Mentha oil are estimated at 13000-15000 tonnes for the current year. This may encourage stockiest liquidation at high levels. Technically market is under fresh buying as market has witnessed gain in open interest by 2.78% to settled at 3694 while prices up 13.5 rupee, now Menthaoil is getting support at 854.4 and below same could see a test of 842.9 level, And resistance is now likely to be seen at 873.4, a move above could see prices testing 880.9.

Trading Ideas:

Menthaoil trading range for the day is 842-880.

Menthaoil spot is at 982/-. Spot market is up by Rs. 22/-.

Mentha oil ended with gains tracking the surge in the demand in spot market.

The prices found further support from tight stocks position in the physical market due to restricted arrivals

The total opening stocks of Mentha oil are estimated at 13000-15000 tonnes for the current year.