A quick report on the weekend position of the mints .
The market is under a pressure for the last three days.The downard pressure on prices has more to do with the impact of new procedures on the commodity exchange, rather than a sign of the speculator having moved away.
Once again lets look at the facts as they stand today:
- The crop estimates stil are at 40,000 mt of oil(about 10,000mt more than last year).
- 75% of the crop is already harvested -ie 25 % crop still stands.
- The last two days have witnessed heavy rains in the growing area(normal for this time of the year).
- About 7000-8000 mt of oil has come into the market,meaning that about 32000 mt is still to come .
- In other words the amount of material currently being held back with the farmers/stockists is around 20-22000mt.
- Although the crop is nearly 15-20% more than last year, the almost ZERO carryover (normally about 8-1000mt) makes it an average year. Thus with a zero carryover and with an increased demand we may be looking at just about meeting their needs.
- The danger area is the standing crop,if this gets damaged,even by 10%, and with the intense holding power,and the activity of the speculators,the market will rise dramatically
- On the down side,people are NOT expecting the prices to go below US$30-32 /kg of Menthol through the year.
- The pressure on prices in the last two days is only because the commodity exchange in an effort to curb speculation has increased the margin to be deposited for trading in menthol from 20% to 30%.
- Most expect the prices to bounce back.
- The Mandi Tax(Purchase Tax) of 2.5% which was not being enforced earlier,has now seen a strict enforcement,which will be an added cost.
- The Indian Rupee continues to rule firm against the US Dollar.
- Most Buyers have not still covered their needs ,and thus there is a waiting demand.
- Stocks are almost NIL in New York and European markets,and prices there are already running at levels of US$37-38/kg for spot material ,which in anycase is not available in large quantities.
- The manufacturers too are not wanting to fill up their machines at such high prices,which will only increase the scarcity in Overseas markets as shipments will be delayed.
- To add to the fire, defaults on shipments have already started,causing stress in buyers.
