1. Mentha oil market witnessing glut

Mentha oil market witnessing glut

The huge carryover stock of mentha oil and resistance to the current market price is leading to a glut with synthetic mint oil garnering larger...

By: | Kochi | Published: January 29, 2015 1:38 AM

The huge carryover stock of mentha oil and resistance to the current market price is leading to a glut with synthetic mint oil garnering larger share of the market, traders said. Prices have declined in the past few months but not to a competitive level.

According to the state-run Spices Board, India is one of the world’s largest producers of mentha oil and exports nearly 80% of its produce.

“Mentha oil market needs further correction as the carryover stocks are huge. At the current consumption level, the stocks would be sufficient for the next one year. Prices have to come down to become competitive with the artificial oil who have gained market share,” Subash Nanda, a prominent trader and member of the Essential Oils Association of India (EOAI) told FE. He blames the futures trade in mentha oil for the current problems of the market.

“The arrival of futures market has destroyed the natural cycle of mint farming. The price discovery is not correct,” Nanda said. Nanda added that the producers of artificial mint have doubled their capacity in the last two years on the back of zooming price of natural mint.

“Speculative forces in the Indian futures market would eventually harm Indian farmers as production of artificial mentha oil and farming increases in other nations due to the volatility and high price,” he said.

“From March 2014 to September 2014 Mentha oil prices fell from R950 per kg to R650 level. After that price sustained in the lower zone and went sideways. In short term price will remain in bullish trend,” Vinita Advani Acharya, Senior research analyst at Geofin Comtrade, said.

At the Multi Commodity Exchange market, mentha oil for delivery in January fell to to R734 per kg  on Wednesday.

It is estimated that more than 77,000 hectares is under mint cultivation in India with more than 90% of the production coming in from Uttar Pradesh. Spices Board said that the bulk of the export is in the form of crystallised menthol. China is a major importer of the crystallised form and re-exports it after value-addition.

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