Mentha, also referred to as Japanese pudina in India, is an essential herb with broad applications in food, pharmaceuticals, and cosmetics. In the trading market, the base value is quoted per kilogram, with a minimum lot size of 360 kg.
Introduction
Mentha arvensis was introduced to India between 1958 and 1964 by the Regional Research Laboratory in Jammu Tawi. In the 1980s, the Central Institute of Medicinal and Aromatic Plants (CIMAP) developed new strains that significantly boosted oil yields. By 1996, India's mentha oil production had reached 6,000 tonnes and surged to over 45,000 tonnes by 2013, according to trade sources.
The rise in production, especially in exports, accelerated post-2004 with the introduction of futures contracts based on mentha oil. Today, India is the largest producer, with 83% of the market share, and the top exporter of mentha oil and its derivatives. The Mentha Oil Market is expected to grow by USD 181.2 million at a CAGR of 10.87% between 2023 and 2028, driven by the health benefits of essential oils, diverse industrial applications, and the expansion of retail space.
Factors that Impact Mentha Oil Market/Price
- Import Demand from Major Countries: The international demand for mentha oil, particularly from countries like China, the United States, and Singapore, significantly impacts its price. As India exports a large portion of its mentha oil production, fluctuations in demand from these major buyers can lead to price volatility.
- USD–INR Exchange Rate: Since mentha oil is an export-oriented commodity, the exchange rate between the US dollar and the Indian rupee plays a crucial role in determining its price. A stronger dollar relative to the rupee makes Indian mentha oil more competitive in international markets, potentially driving up demand and prices.
- Climate-Dependent Crop Yields: Domestic production of mentha oil is highly dependent on climatic conditions during the sowing and growing seasons. Favourable weather can lead to higher yields, increasing supply and potentially lowering prices. Conversely, adverse weather conditions such as cold waves or heavy rains during leaf formation can reduce yields and drive prices up.
- Previous Crop Gains: The price realisation from previous mentha crops influences farmers' decisions on how much acreage to allocate to mentha cultivation in the following season. If farmers received good prices in the previous season, they are likely to increase the acreage under mentha cultivation, potentially leading to higher production and lower prices.
- Geographical and Agronomic Factors: As the world's largest producer of mentha oil, India's production is influenced by factors such as monsoons, pest incidence, and growing areas in the northern regions. These agronomic factors significantly impact the supply chain, thereby influencing the market price of mentha oil.
Things to Consider Before Trading in Mentha Oil
Before diving into mentha oil trading, it's essential to consider several key factors to ensure informed decision-making:
- Market Volatility: Mentha oil prices fluctuate due to changes in global demand, supply chain disruptions, and economic conditions. Understanding these factors, including seasonal variations and international market dynamics, is crucial for predicting price trends and making informed trading decisions.
- Regulatory Environment: Government policies, including export-import regulations, agricultural subsidies, and environmental standards, significantly impact mentha oil production and pricing. Staying updated on current and future regulations is essential for anticipating market changes and adjusting trading strategies accordingly.
- Economic Indicators: Key economic indicators, such as agricultural productivity, domestic and global demand for mentha oil, and currency exchange rates, play a significant role in determining mentha oil prices. Monitoring these indicators helps in forecasting demand and supply trends, which in turn affect pricing.
- Investor Sentiment and Speculation: Mentha oil prices can be heavily influenced by investor sentiment and speculative activities in the commodity markets. Understanding market psychology and the impact of speculative trading is important for managing risks and optimising trade timing in the mentha oil market.
Mentha Oil Expiry Date Calendar 2024
Contract launch calendar for mentha oil contracts for the year 2024
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July 2024
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How to Trade in Mentha Oil via Angel One?
To trade mentha oil via Angel One, follow these steps:
- Open a demat and trading account: Start by opening a demat and trading account with Angel One.
- Activate the commodity segment: Once your demat account is set up for trading, ensure the commodity segment is activated to start trading in mentha oil contracts and other commodities.
- Stay informed: Monitor live mentha oil prices, market movements, and news that could impact the market by following exchanges like MCX (Multi Commodity Exchange).
- Execute your trades: Use the Angel One trading platform to place your trades according to your strategy.
- Implement risk management: Protect your trades by using risk management tools such as stop-loss orders to minimise potential losses.
