Presentation on Mentha Oil

Presented By:Mr. Aurobinda PrasadResearch HeadKarvy Comtrade Ltd.

27 September 2011

Introduction

Mentha Scientific Name : mentha arvensis and commonly known as

Japanese mint or pudina

Varieties & their contribution in total mentha oil Production :

Japanese mint oil (Mentha arvensis)- 75%

Peppermint oil (Mentha pipertia) – 18%

Spearmint (Mentha spicata) – 7%

Mentha oil is obtained by steam distillation process of Mentha leaves

India is the largest producer & exporter of mentha oil in World

Crop Seasonality

IndiaCountry Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

India

Crop Cycle

Sowing : January- February

Flowering : March – Mid May

Harvesting : End of May – July

Cuttings: 2-3 cuttings in a season

SowingHarvesting

Mentha Oil is a winter crop and grown in Rabi season

Mentha Oil processing

Crude Mentha Oil

Terpenes

Isolated Components

Deterpenated Oil

Menthol (70%)

Flakes Crystals

Dementholised Oil (30%)

Rectified DMO

Deterpenation

Rectification

Sector wise Usage

Worldwide consumption of Mentha oil, by Industry (Base year 2007)

Industry % Usage

Oral Hygiene 28%

Pharmaceuticals 26.6%

Tobacco 25.3%

Confectionaries 11%

Shaving Product 7%

Miscellaneous 2.1%

Sources: www.leffingwell.com

Global Scenario

World’s total Production generally hovers in the range of 35000-45000 tonnes

Largest producer & Consumer : India

India75%

China18%

Others7%

Share in Total Production Share in Total Consumption

India39%

China26%

Europe14%

USA13%

Others8%

Indian Scenario

India is the largest producer and consumer of mentha oil in world

Uttar Pradesh is the largest mentha producing state in India

UP95%

Punjab4%

Others1%

State wise share in total Production

State Districts

UP

Barabanki

Moradabad

Rampur

Bareilly

Punjab

Ludhiana

Jalandhar

Moga

Navasaher

Major Producing Districts

Indian Mentha Oil Production Trend

Est.

Source: Spices Board Of India & Trade Estimates

0

5000

10000

15000

20000

25000

30000

35000

40000

450001

99

6

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

*

Indian Foreign Trade of Mentha Oil

CHINA31%

U.S.A24%

SINGAPORE12%

GERMANY8%

U.K3%

BRAZIL3%

JAPAN3%

NETHERLANDS4%

Others12%

Indian Mint Product Export Destinations

YearQuantity (Tonnes) Value (Rs.)

2000-01 4185 15498.22

2001-02 11295 48474.34

2002-03 13589 56557.94

2003-04 10110 37991.76

2004-05 11143 50218.7

2005-06 14544 81320.66

2006-07 17642 110095

2007-08 21100 128050

2008-09 20500 142025

2009-10 19000 118972

2010-11 17450 169679Source: Spices Board Of India

Indian Mint Products Export Trend

Mint Products Exports from Indian (Tonnes)

Source: Spices Board Of India

Product 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Peppermint Oil 2472 2803.4 3352.9 4493.1 2856.2 3449.1

Spearmint Oil 146 291.6 348.8 262.2 91.3 220.3

Other Mint Oil 2381 3437 4110.7 5159.6 4229.5 3209.1

Menthol Crystal 1235 3552.6 4248.9 3973.9 4728 3331.5

Menthol 8311 7557.5 9038.8 6611.3 7095 7361.4

TOTAL 14544 17642 21100 20500 19000 17450

Mentha Oil Price Seasonal Index

90

95

100

105

110

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Price seasonal index has been derived from last 6 year mentha oil spot prices

Mentha Oil Balance Sheet (Tonnes) : India

Note :Assuming Indian production is 75% of world’s total ProductionAssuming Indian consumption is between 30-40% of world’s total Consumption

*Indian production is 40,000 tonnes in 2011 and exports will be 20,000 tonnes astargeted by Spices Board of India•CF : Carry Forward Stocks

YearTotal Supply Total Demand

Production Consumption Exports Derived CF

2006 20500 10660 (±3000) 17642 -7802

2007 27600 14352 (±3000) 21100 -7852

2008 35000 18200 (±3000) 20500 -3700

2009 35000 18200 (±3000) 19000 -2200

2010 25000 13000 (±3000) 17450 -5450

2011* 40000 26250 (±3000) 20000 -6250

Fundamental Analysis

Near Term: Bullish

Rising demand from confectionery on upcoming festive season

Demand from pharmaceutical industry is also expected to remain higher in coming

months ahead of winter season

Chinese mentha crop had been damaged this year by 40-50% due unfavorable

weather conditions during growth stage

Export to China is likely to remain higher as it is the largest importer of Indian mint

product

Stockiest are hoarding their stocks in anticipation of further rise in prices

Fundamental Analysis

Medium - Long Term: Bearish

Next sowing season : January– February

Present hike in prices might provoke farmers to increase acreage under mentha crop

Production estimates will come into the market in January which might create

pressure on prices

Export demand might also cool down

Technical Analysis

Since 2005 until September 2011: Price growth: 302 per cent

YoY gain/loss: 50 to 60 per cent

Performance of 2011 till date: 15% growth from previous year close

Probable targets for remaining this year Rs. 1390-1480 ( Until December 2011)

Intermediate movements: Rs. 1250-1370 ( 30-50 days view)

Buying is still suggested on corrections near Rs. 1250-1280

Technical Analysis

Long term view/call (3-6 months)

Sell in the range of Rs. 1450/60 to 1500 targets: Rs. 1200 then Rs. 1000 with

stop loss above Rs. 1670 ( Applicable for October & November contracts of MCX)

December contract can also be used for selling at the mentioned levels, only after

the contract accessibility

Statistical Analysis

The parabolic move can lift the price till Rs.1400 to 1550, according to the 3rd degree PolynomialequationThereafter, correction can take place which can be more than 1/2 of the vertical distance. Thedownside is however expected to be limited till the parabolic line (white) of Rs.1150 or the baseline of Rs.950

Disclaimer

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