Will The Mint Price Remain Bearish or Bullish .........
In our previous market reports (also available on our website https://www.prkchemicals.com/pkresearch.html ), we had summarized the Menthol industry during the periods. We would like to review the current market situation and brief about the current challenges of the industry.For the last couple of years, world has been facing Covid-19 pandemic. This pandemic effected, to the large extent, demand/supply situation, of Pan Masala, oral care, Mint flavours, pharmaceutical, cosmetics industry. In fact the world had learnt to live without most barring pharmaceuticals.
The pandemic started waning from 2022, therefore world in general and Mint in particular started recovering the lost ground. For last couple of years Indian mint industry was working purely on strict demand/supply mode. But this year the situation seems to change. Speculation could be the order of this year. Speculators have entered in strength and the news of less crop has already raised the sentiments. This is true that there is going to be a shortfall of 10% in Eastern UP but the alarming situation is in Western UP, where the shortfall is approx. 30%. The bulls are on rampaging
It has been seen in previous years that China is the major buyer of Menthol powder and they had been buying between USD 14.00-16.00 levels. They are still looking at the same levels. Unfortunately they are ignoring some very logical and pressing issues, like increase in production cost by way of higher fuel costs, higher costs of land maintenance, higher labour cost, as has been stipulated by Government and above all Governments focus to push the welfare and income of farmers to dizzying heights. Add effect of monsoon because of late cultivation because of long winters. This shall affect distillation and result in reduced returns to the farmers income and another reason Potato-Mustard crop late harvest. India can produce 45,000 MT to 50,000 MT of oil but aforesaid shall decrease it by a very fair percentage.
According to my observation the following major points shall contribute
Concerns over Synthetic menthol = justified?
Menthol, once a 100% natural product, is now having more than 32% of its market share coming from the synthetic product. Apart from a secured source of supply this keeps a check on prices away from speculation. However, with the rising prices of chemicals worldwide, production cost of synthetic menthol is also rising. Interesting fact also remains that the production of synthetic mentha is well planned and committed well in advance.
Imports of synthetic menthol in India
Imports of menthol in India, have been rising ever since the production capacity of the synthetic menthol have increased globally. This has helped in keeping a sharp check in prices, reducing speculation. However, the import costs have been steading increasing
I had already mentioned in my previous reports that synthetic Menthol has attained a regulator role and it seems it is slowly but gradually vying to replace Natural Menthol. Big consumers have started using synthetic menthol for only one reason! And it is PRICE. Synthetic is cheaper, otherwise no consumer would ever replace natural with a synthetic alternative because how would synthetic material effect humans, no one can say or predict at this juncture. Historically synthetic materials have always affected humans adversely.
It is imperative to mention here that even for synthetic manufacturers to maintain low prices, as the production cost is always increasing. The major raw material is a petroleum by product and petroleum prices are rising at a steeper rate. In fact, these manufacturers wish that the natural price should keep rising so that they can increase their prices and justifiably so!
FYI the technology to separate DL content has already been developed.
As of today, around 1000 MT of synthetic material is being manufactured locally and close to 4500 MT is being imported. This quantity is working as a price barrier therefore the natural manufacturers are opposing import of synthetic material and are very vigorously making concerned Government departments about the probable effects of synthetic material.
Moreover, this synthetic menthol is adversely affecting Indian Farmers, as some organisations are labelling synthetic material with green tag and are claiming it to be natural. We are sure the government shall assist Indian farmers (as this is their policy) and shall bring some legislature to control import of synthetic material.
Production=
Today India is largest producer and exporter of Menthol, though it is only cultivated majorly in only one state and that too in only 4 districts.
Lately the production cost of Mint has gone up manifold so some farmers have switched to more lucrative crops, like corn as corn has a minimum price support guarantee from government. Unfortunately, mint farmers are solely dependent of market forces and have no price support. This has resulted in only traditional farmers are cultivating mint in Western UP. But in Barabanki it is different, Mentha farmers have free of cost water availability in that area so they still cultivate it.
Excessive rains destroyed mint roots and its cost has gone up by 100%. This time most of the crop being cultivated is through Transplantation but excessive hot weather is hampering the growth of crop.
East UP has always been the main producer of Mentha oil and around 60% of oil comes from eastern UP area.
A new crop Golden has been introduced because it gives more yield. And if this is cultivated then we might have 5-10% higher yield. But some experts say that Golden doesnot perform well for first 3 years and a booster has to be introduced in its genetic order. So, if this doesnot happen then we can see 10-15% drop in production. Barabanki has always been a leader in production because of free availability of natural resources so lets hope for the best.
The production of Mentha oil was historically high in 2020-21, the area remained almost similar last year but the yields were lower which affected the production. In the current year we forecast production to fall to around 46,238 MT due to sharp fall in area and loss in yields following severe summer heat. which will come closed 14% down in the year 20-21. Last year 21-22 Production area wise more 5% but Recovery was short 10%.and this year present condition we do not know what will be the oil estimate recovery. Farmers opted for more remunerative crops and yields have been decreased following poor recovery.
ABOUT PRODUCTION AREA AND YIELD:-
Farmers opted for more remunerative crops and yields have been decreased following poor recovery. Mint Crop Survey ( Comparison Between 2022-2023 (E) )
Remote sensing based outlook (E):-
We have deployed remote sensing-based crop research for the sowing data
Advance remote sensing technologies that deploy sophisticated tools like machine learning, artificial intelligence with proprietary deep learning algorithms. developed high resolution satellite data by Bharat Rohan.
The total acreage under Mint cultivation in in the district of Barabanki was 1,66,343.9 acres in 2019, by observation through BharatRohans Image classification maps. In 2020 its 1,47759.6 acres . There is a slight decrease in the area by 11.17%compares to that of the previous year . In 2021 approximately 1,50,044.69 acres in 2021 its slight increase in the area by 1.4 %compared to that of the previous year. Even though there has been a light increase in 2021 compared 2020 , its is still 9.8% less compared to that of 2019.
Prakash Chemicals can provide you the exact data if mint sowing is done for the particular latitude and longitude.
Further Bharat Rohan can be contacted if details are required for particular crop.
As to check if the bowl of rice is cooked, one just need to check a single grain if its cooked or not, we have taken Barabanki to determine the sowing area and determine the crop potential for the year. Following are the images obtained from BharatRohan for Barabanki email aman@bharatrohan.in district to see the area of mentha crop in the district. One can visually see the difference in area of mentha crop, which is sharply lower in the current year compared to the last few years.
Carry Over Stock:-
Carryover during 2015-2018 remained at very high levels which kept prices lower, however after 2018 the carryover fall drastically which kept prices volatile.
It is interesting to note that today India has 100,000 MT mint processing capacity. This situation is very alarming! We are expecting opening inventory to be at 3000 to 4000 MT levels.
Domestic Consumption-
Domestic demand of mentha has been steady in the last couple of years.
Many states have seen gutkha and pan masala ban which have seen a lower demand from the pan masala industry.
The last couple of years, demand was affected by rising covid cases and the impact of closure of economy and industrial activities.
With the restart of economic activities, demand of mentha is likely to see a rise in the current year .
India having a predominant young generation and migration from Rural to Urban area is increasing by around 4%. Usage of Mint and its products is increasing in India, especially amongst youth. One of the latest trends is to smoke flavoured Hookah, menthol cigarette (especially by Females). As smoking the afore-mentioned is a taboo so this young generation goes for Mint gargle before going home! Therefore, we are looking at a 10-15% increase in demand. Also, with the opening of offices, usage of flavoured deodorants will increase.
Yearly high low-
Historically, mentha prices remained in a huge range wherein the high and low price range varied by almost 50%.
However, with the increase in lot size of contract in futures prices, which was 5 times the earlier lot size- retail investors were far away from the speculation of futures markets.
With the restoration of lot size again to 360 kg, participation from retailers is expected to return and so is the speculation.
Mentha Oil Exports-
Department of Commerce Export Import Data Bank -Mentha oil Export
29061100- MENTHOL,30039021-MENTHOL CRYSTAL,33012400-ESSNTL OIL OF PEPPERMINT (MENTHA PIPERITA),ITC HS Code of the Commodity is either dropped or re-allocated from April 2004,Quantity in Thousands 2022-2023(E)- Trade Estimates 2021-2022 (F)- Trade Forecasts February,** 100 Kg of Mentha oil produces 75 kg of Menthol, Since there is no separate data on Mentha Piperita exports, the exports could vary by 500-600 MT. Calculation part 1 April to 31 March. Data of March-2022 are trade estimates. Estimated Availability Mentha oil 22-23 (E),Mentha oil/ Menthol
Department of Commerce Export Import Data Bank -Mentha oil Export
29061100- MENTHOL,30039021-MENTHOL CRYSTAL,33012400-ESSNTL OIL OF PEPPERMINT (MENTHA PIPERITA),ITC HS Code of the Commodity is either dropped or re-allocated from April 2004,Quantity in Thousands 2022-2023(E)- Trade Estimates 2021-2022 (F)- Trade Forecasts February,** 100 Kg of Mentha oil produces 75 kg of Menthol, Since there is no separate data on Mentha Piperita exports, the exports could vary by 500-600 MT. Calculation part 1 April to 31 March. Data of March-2022 are trade estimates. Estimated Availability Mentha oil 22-23 (E),Mentha oil/ Menthol. Export date March2022 Estimated
Mentha Oil balance sheet-
We have been trying to access the crop balance sheet of mentha oil. We would like to show the stock to use ratio. This indicates the tightness or easiness in availability of goods for the crop year. Lower the end crop carryover, higher would be the volatility in the market. Similarly, with higher stock to use ratio, end user is more comfortable with the stocks and chances of process moving up are lower.
In the current year, we expect the stock to use ratio (after considering the imports) to be in a single digit, if any further squeeze in production happens, we could further see huge tightness in the supply side.
Stock Ratio Vs Volatility-
One can clearly see the rise in volatility with the squeeze in stock to use ratio. The volatility in market increases. In the year 2017-18, prices of mentha oil more than doubled from their season lows as the squeeze in stocks was witnessed. Whenever, the stock to use ratio tends to go below 10%, there has been a spurt in prices and we may again see the same phenomenon this year.
Technical outlook-
Technically as per the 2-weekly chart of Mentha Oil, prices were trading at the bottom zones of 915 since August 2020 till March 2022
Prices gave a breakout of its important resistance of 940 in April 2022 which drove prices towards the levels of 1140
Ichimoku clouds have turned and sustained green since the past sessions which suggests bullishness and we can see an upside from hereon in the upcoming sessions. Price action will confirm a breakout above the weekly cloud level of 1140 which will be positive for Mentha Oil prices.
Fibonacci ratio levels suggest that prices are currently above the 23.60% Fibo ratio of 1095 which may lead prices towards the 1295 which is the 50.00% Fibo ratio with a hurdle at 1200. If prices sustain these levels, prices may also head towards the conservative target of 61.80% Fibonacci ratio level of 1380 and once Mentha Oil prices break this level with huge volatility, we may see it rally towards the target of 1500 subject to fundamental changes
Time - Fibonacci zones suggests that during the 1st time zone, prices were trading at the bottom zones, and was consolidating at the levels of 925 - 940 in the 2nd time zone and the current 3rd Fibonacci time zone suggests a positive trend for Mentha Oil prices till September 2022 if prices give a close above the levels of 1040 on a weekly basis. If prices give a close below the same, we will have to review our positions but as per the current market conditions, Risk: Reward ratio is favorable for Mentha Oil prices till the targets of 1380.
Technically as per the 2-weekly chart of Mentha Oil, prices have sustained and continued to trade above its important support area of 915 area since May 2020. It had a strong breakout and it is holding well above the levels of 1120 which is the high of June 2021. We could expect a small pullback till the zone of 1090 before the prices rally towards higher zones. A weekly close above the levels of 1180 will confirm an Ichimoku cloud breakout which could lead to continue uptrend in the upcoming session. Fibonacci ratio levels suggests that prices are currently above the 23.60% Fibo ratio of 1095 which may lead prices towards the 1295 which is the 50.00% Fibo ratio. If prices sustain these levels, prices may also head towards the conservative target of 61.80% Fibonacci ratio level of 1380 and once Mentha Oil prices break this level with huge volatility, we may see it rally towards the target of 1500 with a stop loss below 915 as per the current fundamentals and technical.
Ichimoku Cloud: The above 2-weekly chart of Mentha Oil shows that Ichimoku clouds have started to turn and sustain green since the past sessions and we could now see an upside and bullishness from hereon in the upcoming sessions. Price action has confirmed a breakout above the weekly cloud level of 1060. The Ichimoku Cloud is a collection of technical indicators that show support and resistance levels, as well as momentum and trend direction. It does this by taking multiple averages and plotting them on a chart.
Fibonacci Retracement Levels: As per Mentha Oil chart on 2-weekly, it has an important support at the zone of 1095 and now we could expect prices to head towards 50.00% of Fibonacci ratio level which is 1290 and if it sustains these levels, it may also rally towards the levels of 1380 which is the 61.80% Fibonacci ratio level. Fibonacci retracement levels are horizontal lines that indicate where support and resistance are likely to occur, each level is associated with a percentage.
Vortex: The technical indicator Vortex on the 2-weekly chart of Mentha Oil shows that there is a positive trend movement in the market since the past few sessions which could continue in the upcoming sessions. A vortex indicator is used to spot trend reversals and confirm current trends. A vortex indicator (VI) is an indicator composed of two lines - an uptrend line (VI+) and a downtrend line (VI-). This analysis by kedia commodity Mumbai. More details. Visit https://www.youtube.com/watch?v=33FzmVFOJMY
Weather Forecast Barabanki, India Averages
Weather in Barabanki in May:-Temperature hovers around 43c and at night it feels like 28c. In May, Barabanki gets 38.17mm of rain and approximately 1 rainy days in the month. Humidity is close to 35%.
Weather in Barabanki in June:-Temperature hovers around 38c and at night it feels like 27c. In June, Barabanki gets 282.54mm of rain and approximately 10 rainy days in the month. Humidity is close to 55%.
Weather in Barabanki in July:-Temperature hovers around 32c and at night it feels like 25c. In July, Barabanki gets 491.96mm of rain and approximately 19 rainy days in the month. Humidity is close to 75%.
Summary-
low demand but Bullish year china play meager role. Buy Mentha in MCX June at 1095 for positional target of 1320 SL below 970. IF at all the prices moves up then, A close above 1155 should add more as the rallly may fuel for a sharp upside potential of the same target of 1320. Mansoon play major role this year
Piperita oil :-
We shall see a bullish trend this year as the production is around 30% less than last year. We are looking at total production of total 600 MT In Punjab and UP. And henceforth the prices shall hover between INR 2800~3500. It is being observed that last couple of years have seen constant fall in demand of Piperita. The reasons are many. The potency has gone down resulting in less recovery, around 4-5 KGs/Beegha. Moreover, this crop is not giving good results to farmers and their interest is waning. Though we are expecting a price range of 2800~3500 but demand shall be determining final outcome. At present, buying the Natural Mentha Piperita oil locally has become a big deal because there are lots of manufacture in synthetic Mentho-Furan-98% manufacturer in India and De Mentholised base Piperita oil, base blend is also easily accessible in the market. So, the buyers have to make the choice from whom they buy the goods. Quality Material
Spearmint oil:-
This year Spearmint crop is 25% extra as per last year farmers got good price last year. we are anticipating production between 150~175 MT
Basil Oil :-
Basil is a great immunity booster so was used extra therefore we are looking at a price range of around INR 700+ , this year is would be produced around 600 MT
Marigold Tagetes Oil :-
This year District Budaun has seen introduction of Marigold flower. Its recovery is better and so a production of 12 to 15 MT is expected. Price 7000 to 8000 this year
Thanks & Best Regards,
Prateesh Kumar Gupta
Ceo-Mint & Herbals
DISCLAIMER: This report is neither an offer nor a solicitation to purchase or sell Commodities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is
industry during the periods. We would like to review the current market situation and brief about the current challenges of the industry.For the last couple of years, world has been facing Covid-19 pandemic. This pandemic effected, to the large extent, demand/supply situation, of Pan Masala, oral care, Mint flavours, pharmaceutical, cosmetics industry. In fact the world had learnt to live without most barring pharmaceuticals.
The pandemic started waning from 2022, therefore world in general and Mint in particular started recovering the lost ground. For last couple of years Indian mint industry was working purely on strict demand/supply mode. But this year the situation seems to change. Speculation could be the order of this year. Speculators have entered in strength and the news of less crop has already raised the sentiments. This is true that there is going to be a shortfall of 10% in Eastern UP but the alarming situation is in Western UP, where the shortfall is approx. 30%. The bulls are on rampaging
I had already mentioned in my previous reports that synthetic Menthol has attained a regulator role and it seems it is slowly but gradually vying to replace Natural Menthol. Big consumers have started using synthetic menthol for only one reason! And it is PRICE. Synthetic is cheaper, otherwise no consumer would ever replace natural with a synthetic alternative because how would synthetic material effect humans, no one can say or predict at this juncture. Historically synthetic materials have always affected humans adversely.
the natural price should keep rising so that they can increase their prices and justifiably so!
