Menthaoil prices dropped on fresh selling after the speculation that sowing activity had been increased in key production area of UP. The weather looked good and everything seemed fine as of now as farmers are still under stress, as they have already suffered a lot because of demonetization. As cash is the primary mode of transaction in agriculture sector which contributes 15% to India’s total output. Earlier it was estimated that total area under Mentha planting will drop by 20% to 1.75 lakh ha for this season resulting into a proportionate fall in Mentha oil production this year. While sentiments is improved after the report titled, "World Essential Oil Market - Opportunities and Forecasts, 2015 - 2022," the world essential oil market released last year which expects industry to reach $11.5 billion by 2022, with a CAGR of 10.1% from 2016 to 2022. As some of the key driving factors of the market are rising inclination towards natural products, growing popularity of relaxation therapies, increasing disposable income resulting in better standards of living, and growing awareness of the probable side effects of chemical substances. The essential oil market is highly dependent on the raw material prices, which are expected to be steady in the near future. Increasing use of essential oils in spa & aromatherapy, flavoring, and fragrance industries has significantly fueled the market growth. Technically market is under long liquidation as market has witnessed drop in open interest by -1.73% to settled at 2553 while prices down -0.4 rupees, now Menthaoil is getting support at 983.4 and below same could see a test of 974.2 level, And resistance is now likely to be seen at 1000.4, a move above could see prices testing 1008.2.

Trading Ideas:

# Menthaoil trading range for the day is 974.2-1008.2.

# Mentha oil spot at Sambhal closed at 1115.50 per 1kg. Spot prices was down by Rs.-11.70/-.

# Menthaoil prices dropped on fresh selling after the speculation that sowing activity had been increased.

# The weather looked good and everything seemed fine as of now as farmers are still under stress.

# Earlier it was estimated that total area under Mentha planting will drop by 20% to 1.75 lakh ha for this season.