Menthaoil October contract gained Rs 6.1 and settled at Rs 1196.7 on short covering after prices dropped on the back of subdued demand in the local markets along with recent ban on Gutka in some states. Sources expect some more corrections as the ban would lower the domestic demand. Overall trading activities remained low but traders expect pick up in demand in the coming weeks. Better production prospects have been keeping overall sentiments weak. Production this year likely to exceed 50000 tonnes as per sources vs 38000 tonnes last year. Higher sowing activities due to the high rates obtained by farmers last year resulted in higher production this year. In Uttar Pradesh, the largest producer of Mentha Oil in India, the area has been forecast to rise to 2.10 lakh ha vs 1.75 lakh ha. Higher stocks in the mandis from higher arrivals also kept pressure on the market sentiments. However traders also expect the demand to rise over next few months once the prices stabilize at the lower levels as the arrivals get over. The total arrivals stood at 500 drums. The contract made intraday low of Rs 1172.9 a kg and high of Rs 1220 a kg with the volume of 4268 and total open interest for the same contact was at 4076. Now support for the menthol is seen at 1173.1 and below could see a test of 1149.4. Resistance is now likely to be seen at 1220.2, a move above could see prices testing 1243.6.

Trading Ideas:

Mentha oil trading range for the day is 1149.4-1243.6.

Menthaoil spot is at 1392/-.Spot market is up by Rs. 20/-.

Mentha oil ended with gains on short covering after prices dropped on the back of subdued demand in local markets

Better production prospects have been keeping overall sentiments weak

In Uttar Pradesh the area has been forecast to rise to 2.10 lakh ha