InvestorQ : Can you tell me what drives demand and supply for mentha oil?
Aastha Awasthi made post

Can you tell me what drives demand and supply for mentha oil?

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Mitali Bhutta answered.
2 years ago

In a way, India drives the price of mentha oil. Out of the total global production of 50,000 MT, India produces nearly 83% of the world output with China producing 9% and Brazil producing 7%. Therefore, the economics of mentha oil are virtually determined by India. Out of India’s total mentha oil exports, nearly 55% goes to China while 16% goes to the US and around 5% goes to Singapore. Most of the other nations have a very small share of the total mentha exports from India. Since India is the dominant producer of mentha oil in the world, factors like monsoons in the Northern region where mentha is cultivated, acreage and incidence of pest attacks all have an important bearing on the supply and price of mentha oil. Globally, there is a robust demand for mentha oil and related products and hence the key determinant will be how the supply trends move.

India currently exports nearly 60% of its mentha oil output and this share of exports has been consistently rising over the last few years as the price of mentha oil has been on an uptrend. Apart from the acreage and the cropping patterns, the price of Mentha oil is also influenced by the stocks of mentha oil available with farmers as well as in the accredited warehouses. Like in the case of many commodities, excess inventory of mentha oil will have a sobering impact on prices.