Menthaoil settled up 3.88% at 717.6 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 the commodity uptrend. But, expectations of higher output from the major producing belts capped gains on mentha oil prices. As per the market sources, the total sowing acreage of mentha oil is expected to decline by 20-25% in the current year on the account of delayed harvesting mustard and wheat crop in major areas of Uttar Pradesh and Punjab coupled with poor realization rate from mentha oil. 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. Sources are expecting that the total exports is likely to reach in the range of 21000 to 21500 tonnes as most of exporters are showing strong buying participation at current levels with the anticipation of limited supplies in next marketing season. Technically market is under short covering as market has witnessed drop in open interest by -7.05% to settled at 5086, now Menthaoil is getting support at 701.8 and below same could see a test of 685.1 level, And resistance is now likely to be seen at 726.8, a move above could see prices testing 735.1.

Trading Ideas:

Menthaoil trading range for the day is 684.8-734.8.

Menthaoil spot is at 792/-. Spot market is up by Rs.7/-.

Mentha oil prices gained 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 the prices.

But, expectations of higher output from the major producing belts capped gains on mentha oil prices.