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    Mentha oil may be warming up for a breakout

    Synopsis

    With the harvesting season just 3-4 weeks away, there seems to be no major reason for a sudden spike in mentha oil, added Katariya, who expects the spot price to remain in the Rs 950-1,200 range for next three months.

    Mentha-1---GettyGetty Images
    In the spot market, mentha oil declined by Rs 13.8, or 1.29 per cent, to Rs 1,052. Mentha oil has lagged behind most agri-commodities in the recent past.
    Mentha oil jumped more than 1 per cent on Thursday to touch the highest level recorded in a week. On the Multi Commodity Exchange (MCX), mentha futures for April 30 delivery gained by Rs 9.80, or 1.03 per cent, to Rs 965 per kg, a level last seen on April 16. The May 31 contract also jumped to quote at Rs 960 per kg, up by Rs 10 or 1.05 per cent from its previous close.

    In the spot market, mentha oil declined by Rs 13.8, or 1.29 per cent, to Rs 1,052. Mentha oil has lagged behind most agri-commodities in the recent past.

    Is that about to change anytime soon?
    Down 3 per cent on a year-to-date basis so far in Calendar 2021 and about 22 per cent since April 2020, mentha oil has moved sideways since mid-June last year -- a trend analysts say is likely to continue in the near term.

    "The indecisive trend is likely to continue as the aroma chemical industry has been badly affected by the frequent lockdowns that have paralyzed exports from India due to low demand," said Gaurav Katariya, Founder of Mayukhi Investments.

    With the harvesting season just 3-4 weeks away, there seems to be no major reason for a sudden spike in mentha oil, added Katariya, who expects the spot price to remain in the Rs 950-1,200 range for next three months.

    Should you buy?
    Analysts say mentha oil demand is expected to rise with a pickup in industrial demand as concerns ease on the pandemic front. "Mentha production has improved in the country due to favourable weather conditions and better availability of farming equipment," said Ajay Kedia, Founder and Director of Mumbai-based Kedia Advisory.

    "Due to Covid, the demand for mentha was slightly dent, but now it is improving, which will support prices," he said.

    Mentha oil is used by industries such as pharmaceuticals and FMCG for manufacturing soaps, sanitizers and cough syrups. It is also used heavily in the pan masala business. Besides, mentha also commands high demand in the production of cosmetics and confectionery goods.

    Kedia recommends buying mentha oil at Rs 960 for a target price of Rs 1,020 for the next three months with a stop loss at Rs 920.

    Having a shelf life of 20 years, mentha has the potential for a strong bullish trend, said Katariya, who recommends buying it only for traders, who can hold it for the next six to 12 months.

    India is the world's largest producer and exporter of mentha oil.



    ( Originally published on Apr 22, 2021 )
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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

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    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

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