MCX Mentha Oil Plunges On Higher Sowing: April 24, 2012

Mentha oil futures corrected on Monday for the sixth consecutive day due to selling seen at higher levels and estimates of higher sowing of mentha on expectations of a better realisation. Mentha oil futures hit the 4% lower circuit.

The spot as well as futures settled 7.85% and 4% lower respectively. Total special cash margin of 25% on the long side has been imposed on all contracts of mentha oil from March 9, 2012. For detailed reference please refer to the Circular No: MCX/T&S/074/2012 dt 06/03/2012. 

Production, Arrivals And Exports 

According to market sources, sowing of mentha in Western UP is expected to increase by 30% as compared to last year, while sowing in all regions is expected to increase by 20%. Arrivals in entire UP stand around 130 drums (1drum – 180 kgs) daily. 

Exports of mentha during April 2011 to January 2012 witnessed a decline of 6% to 12,850 tonnes as compared to 13,550 tonnes in the same period last year.  

NCDEX Potato Finishes Up On Short Covering

NCDEX potato futures witnessed a range-bound on Monday supported by demand in the domestic markets, while good availability capped the upside and witnessed some correction due to profit booking at higher levels. Potato spot as well as futures settled 0.15% and 0.59% higher.  

As per  circular issued by NCDEX dt April 10, 2012, A Minimum Initial Margin of 10% of the value of the contract or VaR based margin whichever is higher will be imposed on all running contracts and yet to be launched contracts of potato with effect from beginning of trading day Thursday, April 12, 2012. It is clarified that the Special Margins, Additional Margins or any other margins levied shall be over and above the revised Minimum Initial Margin.

Production Scenario

The cold storages are said to be full to the extent of 95% of their capacity. The markets participants expected the production to cross last year’s levels, but now they expect the production to fall from last year.  

According to  the initial estimates of  National Horticultural Research and Development Foundation (NHRDF), potato output in the season 2011-12, is estimated higher at 43.6 mn tn compared to 40 mn tn last year. 

However, markets are expecting further decline in output due to late blight disease by 20%.The output in UP and West Bengal, the two biggest potato growing states is expected to be lower at 12.8 mn tn (13.6 mn tn in 2011) and 10-15% (13.3 mn tn in 2011) respectively.