In March, the prices for Crude Mentha Oil went up to INR 2700 at the highest level & came down to INR 2200 at their lowest level. So on an average, we may say that the prices of Menthol Crystals were around USD 60 in March 2012.
Because of these high prices in March, when the new crop was also being sown, almost all the farmers, most of the stockists & even many small & medium manufacturers had sold off their stocks. Hence in the end of March 2012, the only stock which was there in a collective manner was there on MCX & some stock was also there with limited number of exporters. As soon as April arrived, the future months of June & July 2012 also opened for trading on MCX. The investors who had bought the MCX & were holding stocks on it were alarmed to see that the months of June & July were showing very low rates as compared to the high rates of April & the difference was almost to the tune of USD 12-14.
This scenario created negative sentiments in the market & the investors on MCX started to offload their stocks aggressively. Similarly, the manufacturers & operators who had some stocks also started selling.
Both these moves combined together & pushed the market for Mentha Oil down substantially to a level of INR 1500 in April 2012 from an average of INR 2500 in March 2012. These comparatively low prices also resulted in the physical lifting of most of the stock by the manufacturers / exporters, which was being sold on MCX by the investors, & the manufacturers/exporters in turn offered the same in both the domestic/international market.
One more factor which positively affected the export prices of menthe products was a substantial fluctuation of US Dollar, which went down from INR 54 per USD to INR 48.5 per USD before again appreciating to INR 54.5. This also affected the realized export priced to the tune of approx. 10% and resulted in quite comfortable export prices for the international buyers in comparison to the prices a month ago.

The crop looks good, the weather has been favourable throughout & the plantation area indeed looks increased by about 30-40% from last year. This is also evident from the fact that a record number of new farm distillation units have been installed all over the crop area & the existing distillation units have been also repaired/refurbished by the Mentha Oil distillers, which generally only happens if there is an expectation of very good crop. This in turn also results in quick distillation of the ready crop, resulting in lesser damage because of heat/rains.

After this free fall of prices based on sentiments rather than anything else, the market has now undergone a slight correction & the present prices for Crude Mentha Oil are roaming in the price range of INR 1600-1650.
Almost all the farmers, most of the stockists, small & medium manufacturers & even some of the large manufacturers & exporters have reduced their unsold stock levels to minimum.
This has resulted in a drastic reduction in carryover stock in the pipeline for the next crop year i.e. from June 2012 to May 2013 to an unprecedented low level of between 1500 to 2500 MT.
The new Mentha Oil has started arriving in the market since last 3-4 days which is around 100 drums as on date. We feel that all the distillation units should start functioning in full swing around 10th of June & the arrival should peak around that time.

If the good weather holds & nothing adverse happens, we can expect a 30-40% increase in the Oil this year viz-a-viz last year. On the other hand, the farmers are flush with money & have seen very high prices last year, which will result into raised expectations this year too. The stockists/middlemen have also made good profits last year & they too are ready to repeat the same this year. The carryover stock is very less. The stock on MCX is also down considerably from not its average level, but also from its minimum level. Most of the manufacturers & exporters in India are also empty & the same looks to be the case of Chinese manufacturers.
Combining all these aspects, it is our individual opinion that the price levels in June & July can be expected at INR 1500 for some time & if the crop & yield are as expected, the prices might also come down to INR 1400 for a short time. But there might be a resistance by the farmers at this level & we also feel that the stockists will enter in earnest at this level. Hence overall we can expect a fluctuation in the range of INR 1400 to INR 2000 per kg in the Oil prices in this coming crop year. The availability of the Mentha Oil, as last year, might depend on the ruling prices at that time, rather than the stock in hand.
We hope that this report will serve its purpose & will help in arriving at your buying & selling decisions. We also await your requirements for Menthol Crystals, Menthol (96%), all grades of peppermint oils, graded Menthones, Terpenes & their fractions, cis-3-hexenol, Mentha oil & other related products.