Here is a report of Mints as we see it today.
The last two days gave witnessed a heavy increase in the prices of the mentha oil.
This only means that the firm trend is likely to continue for a lot longer than what most were expecting.
A look at the prevailing situation suugests that this trend may intensify over the next two months
- The crop is now in the hands of farmers and very small stockists in the growing areas.From a small farmer who holds 50-100 kilos that crop has now moved in the hands of sotckists who stock 2-3 drums.THese people have holding power,and every increase in the market gives them a fresh incentive to hold back the arrivals.Thus the commodity index has onlt to move a little and the arivals stop.
- Local stocks in Europe and USA are very low and it is reported that small lot of 200-300 kilos are being sold at levels of US$46-48/kg.Material is now being sought to be taken to customers by airfreight,which is only adding to add to the pressure.
- It has been reported that some of the large operators have incurred heavy losses ,as they had sold short in the past.These operators have now either shipped the material,or as it has been reported defaulted.Having bitten the bullet they are now keen to make good their losses and are extremely keen to take the market up.
- The sentiment in the market is extremely bullish and some farmers have been murmuring that this will be the watershed year in the history of menthol in India.Prices of mentha oil touching Rs 1500 (currently Rs1330/kg),in the near future are being heard.
- Most resellers in China have received low priced materials that they had booked,and have sold them, expecting the prices to come down and book the profis.This has kept the menthol prices comparatively low,as manufacturing margins were squeezed to be competitive,but now since these low priced stocks are out of the market,it is expected that the prices will rule firm.
- The only redeeming feature has been the deprication of the Indian Rupee to the dollar,which has depreciated by about 2.5% in the past one month.This has been passed on to the customers.But again the Rupee has started rising,and thus the parity will force higher prices.
- There may be a correction towards end of October,when farmers will bring some more oil out at festival(Diwali) time.But this will be temporary.
- Demand for other products of mints eg Mentha oil/Menthone/CIS 3 Hexen 1 ol ,are at an all time high.The prices for these too have increased exponentially.
- Our advise, as we have been saying all along, is to cover positions.
