Mentha oil contracts on the boil

Mentha oil contracts hit the upper circuit, by almost 6 per cent, on the Multi Commodity Exchange on Monday.

The September contract closed at Rs 736 a kg, whereas the October and November contracts closed at Rs 755 and Rs 767 a kg respectively.

According to traders, the recent surge has come on the back of lower-than-estimated output of mentha crop. Also, analysts said, export enquiries from Japan and Korea was keeping market sentiments up.

At the same time demand from China is also on a rise. Export enquiries from China came earlier and so the prices are shooting up.

"With the kind of present bullishness in the market, level of Rs 750 per kg this week can not be ruled out," said the analyst.

At present, the domestic arrival too is on a lower side. It is around 55- 100 drums (180 kg) a day against the required 100-150 drums.

"There was an estimation of 25,000 tonne of mentha crop, however, it seems to be hovering around 22,000 tonne," said Girish Gupta, a Chandausi-based trader.

In the spot physical market prices touched Rs 725 a kg, which is a rise of Rs 75 since last Monday. With low output, traders say that prices can touch any level.

According to market sources, dry season and less sowing contributed in less output.

India's consumption of mentha oil is on the rise. In 2005, it was around 5,000 tonne, which, analysts said, is expected to rise to 9,000 tonne in 2006.