Mentha Oil is one of the Agri commodities that has been traded through MCX. MCX stands for the Multi Commodity Exchange. MCX is the exchange where you can trade commodities such as gold, silver, nickel and agricultural products like cotton, coffee, turmeric, etc. just like the BSE exchange where stocks of companies are traded. The trading mechanism done through MCX is pretty transparent, and it is disciplined with the regulatory framework.
Mentha oil is one of the Agri commodities which is extracted from an aromatic herb, Mentha leaves. The oil also goes by the name of Japanese Pudina in India. The dried Mentha arvenis leaves are made into mentha oil using steam distillation and filtration process, which is processed to produce menthol and other derivatives. The primary producer and exporter of mentha oil and its derivatives in India. The fields like pharmaceutical, food, flavouring industry and perfumery and more extensively use Mentha oil and its derivatives.
Jammu Tawi, the Regional Research Laboratory, introduced the Mentha arvensis in India between 1958 and 1964. Later in the year 1980s, the Central Institute of Medicinal and Aromatic Plants(CIMAP) introduced new strains that improved the oil yields. According to the trade sources, In 2013, India was producing 6000 tonnes of mentha oil and exceeded 45000 tonnes.
After the initiation of futures contracts based on mentha oil, there was a rise in mentha oil production, especially its exports, came in after 2004.
Mentha oil prices have been continuously pretty volatile. In the last few years, India has developed as an export centre for mentha oil and its derivatives, revealing exporters to high price volatility. As Mcx has included the liquid futures contract, the value chain partners can hedge this price risk on the MCX platform.
Reasons for trading MCX Mentha Oil:
India is the primary producer and exporter of mentha oil and its derivatives. Currently, the significant producers of mint oil globally are India (80%), China (9%), Brazil (7%), and the US (4%).
Not only as a producer, but India also exports different types of mint oils to various countries including Brazil, France, Argentina, Germany, UK, Japan, USA, etc. and these varieties include the Japanese mint oil too.
Before selling, mentha oil exporters, processors, and traders stock the commodity in the harvesting season in expectation of better prices.
Factors Influencing the MCX Mentha Oil Rate daily:
The demand from major importing countries that include China, USA and Singapore.
USD–INR rate, the commodity being export-oriented, USD-INR is a significant factor that could influence the market.
Price of Mentha oil and its derivatives in the international market.
The production rate of Mentha oil.
Climate changes during the sowing period might cause an increase or decrease in the Mentha crop acreage.
Weather conditions like a cold wave and heavy rains will influence the market as it is harmful during leaf formation.
Consumption and domestic demand from pharmaceutical firms which usually raises in winter.
Mentha oil stocks in The MCX-accredited warehouses carry forward Mentha oil stocks and the stocks available with farmers. The supplies are maintained with these vital indicators which influence the prices.
Before trading in Mentha Oil, it's better to know the Contract Specification of MCX MENTHA OIL:
The contract starts at 1st of a contract launch month and the last trading day falls on the last day of the calendar of the contract expiry month. If the contract launch date falls on a holiday, then the following day the contract starts. Whereas, if the contract expiry day falls on a holiday, the previous day the contracts expire.
Trading Period: Mondays through Friday
Trading Session: Monday to Friday: From 9.00 a.m. to 5.00 p.m
Trading Unit: 360 Kg (2 drums)
Quotation/ Base Value: 1 kg
Maximum Order Size: 18000 kg (100 drums)
Tick Size (Minimum Price Movement): 10 Paisa per kg
Daily Price Limits shall have two slabs. Initial and Enhanced slab. Once the initial slab limit of 3 % is reached, then after 15 minutes the slab can be increased by the enhanced slab of 1% only in the contract.
Extreme Loss Margin: 1%
For individual clients: 160 MT
Collectively for all clients: 1600 MT or 15% of the market-wide open position, considerably whichever is higher for all Mentha Oil contracts combined.
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