(MENTHA OIL) Maminul Islam. A14018

INTRODUCTION

>Mentha oil is derived by steam distillation of Mentha Arvensis (a Japanese mint) leaves, the basic raw material required for the production of menthol.

>In India, there are two types of menthol: crystals and flakes. Menthol is available in different shapes and sizes such as large crystals (bold), medium crystals, small crystals, and flakes in shape of powder.

>Menthol crystals are the basic ingredients for toothpaste, mouth fresheners, pharmaceuticals, ayurvedic and Unani medicines, chewing tobacco, pan masala, pain balm, confectioneries, cosmetics, and fragrances industries, etc.

GLOBAL SCENARIO

>About 32,000 MT of mentha oil is produced in the world from about 0.29 million hectares of land with an average productivity of about 110 kg per hectare during 2008.

>India is the largest producer and exporter of mentha oil. At present, the major producers of mint oil in the world are India (80%), China (09%), Brazil (7%), and the US (4%).

>Mentha arvensis is cultivated in semi-temperate regions of the Himalayan hills—UP, Himachal Pradesh,Punjab, and Bihar.

>India cultivates about eight species of mentha; out of which three species are exported. At present, India produces about 32,000 MT and exports 6,000 MT of mentha oil. India exports different types of mint oil to countries including Argentina, Brazil, France, Germany, Japan, and the UK. Export varietiesinclude the Japanese mint oil (derived from Mentha arvensis), peppermint oil (Mentha pipertia), dementholized Japanese mint oil, spearmint (Mentha spicata), water mint oil (Mentha aquatic), horsemint oil (Mentha sylvestries), Bergemont oil (Mentha citrate), etc.

DEMAND AND SUPPLY

>Mentha oil crop sowing season starts during February–March every year. The crop takes 90 days to mature (vegetative) and produces first flowers. This is the best stage to harvest. The crop harvesting is done during May & June.

>Mentha leaf is a commercial part of the plant including young flower buds, which contain volatile mentha oil. Its leaves are sun dried for higher oil yields.

>Leaves and flowering tops give the highest yield. Distillation of dried leaves is cheaper than that of fresh leaves.

>By steam distillation and filtration, a golden yellow volatile oil is obtained. Menthol flakes can be separated in a crystalline form on cooling the oil. The remaining (de-mentholized) oil is used in confectioneries and flavoring.

>The manufacture of menthol flakes form de-mentholized oil has been taken up on a commercial basis by a few firms in Delhi, Mumbai, and Gujarat. There are several small distilleries in UP engaged in production of menthol flakes and de-mentholized oil.

>Major mentha oil markets in UP are Chandausi, Sambhal, and Barabanki. Distilled mentha oil is brought into the specific market by farmers and producers to commission agents. As per requirements, mentha processors, crystal manufacturers, and exporters purchase the oil from market.

>About 350–400 drums (1 drum = 180 kg) arrive into markets during June–November, and the arrivals decline in the off season.

FACTORS INFLUENCING THE MARKET

>An increase or decrease in the mentha crop acreage depends on the climate during March, April, and May.

>The crop development is based on the weather progress, particularly cold wave and heavy rains during leaf formation, in key growing regions.

>The winter season is the peak demand period for crystals, which is used in the preparation of common cold and cough related medicines.

>Mentha oil price tends to firm up during November–December and eases down during the harvesting period in May–July.

>Mentha oil storage stocks in warehouses, carry forward stocks, and stocks available with farmers are key figures as far as supply levels are concerned.

>Mentha oil exporters, processors, and traders stock the commodity in the harvesting season before selling in expectation of better prices. Stockiest provide liquidity in the physical markets.

>Mentha oil futures contract has been utilized as the best price discovery on an electronic platform and hedging instrument from volatile physical market prices.

Symbol : MENTHAOIL Description : MENTHAOILMMMYY

Trading unit : 360 kg (2 drums)Quotation / Base value : 1 kgMaximum order size : 18000 kg (100 drums)Tick size (minimum price movement) : 10 paise

Daily price limits: The base price limit will be 3%. Whenever the base daily price limit is breached, the relaxation will be allowed upto 4% with a cooling off period of 15 minutes

Maximum allowable open position For individual clients: 300 MT For a member collectively for all clients: 1500 MT or 15% of the market-wide open position, whichever is higher.

Delivery unit :720 kg / 4 drums (with a tolerance limit of 1kg per drum) and direct multiples thereof, though he will get the value only for actually quantity delivered by him. Delivery period margin 25%