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Mentha oil on the Multi Commodity Exchange of India (MCX) was the top performing commodity last week. The active August contract futures gained 6 per cent. The contract reversed sharply higher from the low of ₹1,128.60 per kg and made a high of ₹1,2283 per kg on the back of strong fundamental factors.
However, towards closing hours on Friday, the market pared some of the gains to close the week at ₹1,198.20. According to estimates, mentha oil production in India for crop year 2016-17 will be around 38,000 tonnes. As per the data, the global demand of essential oil will increase in the coming years. This will boost mentha oil demand, mainly from medicines, health products, cosmetics as well as food and beverages. Also, the limited supply from the major producing regions of Uttar Pradesh is giving support to mentha in the futures market.
Mentha oil futures are expected to dip in the early part of the coming week, as investors are likely to liquidate their long positions. However, the strong fundamental factors are likely to limit the losses and, once again, the market is expected to resume the uptrend and may test new highs, going forward.
The writer is Head-Commodity Research, Karvy Comtrade
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