Mentha oil futures continue to rise. Here’s how to trade today
MCX August Mentha Oil futures extended their rise in Wednesday’s trade with the commodity hitting the day’s high of Rs 1,005 per kg, up nearly 1%. Experts remain positive on the prospects of mentha oil and recommend a buy for traders on the decline. As for intraday trading strategy, buying is recommended.
Mentha oil futures have jumped more than 18% in August and are currently trading at a 4-month high level, riding on sentiments around the fall in output and amid hopes prices could remain firm, said experts.
Anuj Gupta, Head Commodity & Currency, HDFC Securities recommended a buy on MCX Mentha Oil August futures at Rs 995 with a stop loss of Rs 970 and a price target of Rs 1,030.
Commenting on the current surge, Anuj Gupta, Head Commodity & Currency, HDFC Securities, said that the rally in mentha oil futures has been on the back of crop damage due to floods in many areas where the crop is sown, including Barabanki, Chandausi and Rampur, low arrivals and growing export demands.
The commodity has increased by 18% on a month-to-date basis, Gupta said. The low production, demand from domestic FMCG companies and exports are likely to keep prices on the up, Gupta said.
“The years 2022–23 witnessed a significant decline in the production of mentha oil, with only 41,937 MT produced compared to 48,389 MT in the previous year. This led to an increased reliance on synthetic menthol, which impacted the price of mentha oil. Looking ahead to the years 2023–24, the production of mentha oil is expected to drop even further, down to 32,259 MT. This represents a decline of over 23%, which is likely to lend further support to the prices of mentha oil,” Neha Qureshi, Senior Technical & Derivative Analyst, Anand Rathi Commodities & Currencies told ETMarkets.
She also sees the production of synthetic menthol declining by about 20%, from 4,193 MT to 3,355 MT and said that it could further prop up the prices.Anand Rathi analyst sees the export market benefiting from rupee depreciation and expects these factors to collectively shape a promising outlook for mentha oil’s market trajectory.
On the daily chart, MCX Mentha Oil August futures are trading above the falling trend line which indicates bullishness in the counter. The 21 & 50-day Simple Moving Average (SMA) have given positive crossovers on the daily timeframe, she said while recommending a buy-on-dip strategy.
Brokerage firm Geojit also has a positive view on mentha oil futures with support seen at Rs 971 and next support at Rs 952 while the resistance is at Rs 1,088 and the next support at Rs 1,069.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)