Commodity Trading Tips for Menthaoil by KediaCommodity

Ajay Kumar Kedia 29 July 2013

Menthaoil yesterday settled down -1.19% at 897.8 due to slack physical market demand. Higher production and high stock levels however could prevent markets from recovering a lot. Mentha oil production this year expected higher at more than 60000 tons against 50000 tons last year. Weak trend in the mentha oil prices is still exist as demand failed to pick up at lower levels. Higher production estimates, good stocks may limit the commodity prices in the short term to certain extent. 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. 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. Moreover, the total opening stocks of Mentha oil are expected to reach 13000-15000 tonnes in the next year. Technically market is under fresh selling as market has witnessed gain in open interest by 6.57% to settled at 4915 while prices down -10.8 rupee, now Menthaoil is getting support at 891.4 and below same could see a test of 885.1 level, And resistance is now likely to be seen at 906, a move above could see prices testing 914.3.