MCX Mentha Oil Tumbles On Selling Pressure: April 19, 2012

Mentha oil futures corrected on consecutively for the second day on  Wednesday on account of selling seen at higher levels and increasing of the arrivals due to liquidation of stocks at the end of the current marketing year and of reports that the acreage may increase for the next marketing year by around 20% on higher realisation. 

The futures hit the 4% circuit breaker during the day. The spot as well as the  futures settled lower by 0.94% and 3.85% 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 Edges Higher On Short Covering

Potato spot traded sideways to positive on Wednesday due to rollover  of positions due to the upcoming expiry and demand in the domestic markets. The spot settled higher by 0.53% while the futures settled 0.93% higher in the April contract. 

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 than 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.