Bumper crop may push mentha tags below Rs 400

Spot mentha oil prices are likely to breach the key support level of Rs 400 a kg within a fortnight on expectations of a bumper crop, market players said on Tuesday.

"Provided the weather conditions remain favourable, mentha output this year is likely to top 25,000 tonne. This could lead to a crash in market prices to as low as Rs 350 a kg," a Sambhal-based dealer said.

He said though demand from stockists is expected to be strong, it is not likely to cushion the prices due to a very high output estimate.

Last year's mentha oil output is pegged at about 18,000-20,000 tonne. The mentha crop is sown in February and harvested from May-end onwards.

Another Sambhal-based dealer said the crop output estimates are bullish as the early harvest arrivals are strong.

He said about 75-100 barrels of mentha oil are arriving in Sambhal and Chandausi "� key mentha oil spot markets "� every day.

Arrivals are expected to gain momentum from next week and a steady decline in prices is expected, he said.

A Mumbai-based dealer said the effect of high output will be soon visible in the far month mentha oil contracts on the Multi Commodity Exchange.

"Currently, July and August contracts are higher than the June contract. The trend is seen reversing in the next one-two weeks and the contracts are likely to be Rs 5-7 per kg cheaper than the June contract," he said.

MCX June mentha oil contract closed at Rs 425.50 a kg, while July and August contracts were at Rs 429 and Rs 434.10, respectively.