Cardamom and Mentha Oil

16.1 Monsoon Blues: A Lesson from the Agri Markets

Varun: Isha, I heard someone lost a lot of money trading Jeera futures. What went wrong?

Isha: Classic beginner mistake. They ignored monsoon forecasts. A strong monsoon meant a bumper crop, so prices fell—but the trader had gone long.

Varun: So weather really matters in agri trading?

Isha: Absolutely. Unlike metals or energy, agri commodities are tied to nature. Rainfall, crop cycles, and harvest conditions drive prices.

Varun: That’s a whole new layer of analysis.

Isha: Yes, and it’s why understanding seasonal fundamentals is key before placing any agri trades.

• In the early 2000s, a trader from Bengaluru ventured into commodity markets just as MCX was gaining traction. With equities already familiar territory, commodities seemed like an exciting alternative. After attending a few introductory workshops, the trader opened a commodity account and prepared for the first trade.
• The chosen asset was Jeera futures, a spice contract traded actively on the exchange. Without a deep understanding of crop cycles or weather patterns, the trader took a large long position, expecting prices to rise. However, over the next few days, Jeera prices began to fall sharply. Additional capital was infused to average down, but the decline continued, eventually wiping out the trading account.
• A post-trade analysis revealed the core mistake: monsoon forecasts for Gujarat were exceptionally strong, indicating a bumper harvest. This led to expectations of increased supply, which had already been priced into the market. The trader had unknowingly bet against seasonal fundamentals.
• This experience highlights a critical truth in agricultural commodity trading: weather patterns, especially monsoons, play a decisive role in price movements. Unlike metals or energy, agri contracts are deeply tied to nature’s rhythm. Rainfall, sowing conditions, harvest timelines, and regional climate reports can dramatically shift market sentiment.
• Liquidity in Agri contracts tends to concentrate in the current-month futures, making them the preferred choice for most traders. These contracts offer tighter bid-ask spreads and lower impact costs, especially for market orders.
• The Jeera contract eventually bottomed out and rallied significantly—after the trader had exited. The lesson was clear: understanding monsoon dynamics is essential before trading agricultural futures. Without it, even well-timed trades can turn into costly mistakes.

16.2 – Rainfall and Its Role in Agri Commodity Trading

Agriculture’s Shifting Role in the Economy

• Agriculture once stood as the cornerstone of India’s economy, contributing over 30% to the national GDP during the 1950s and 60s. Over time, however, the rise of manufacturing and services, particularly IT and financial services, has reshaped the economic landscape.
• Today, agriculture accounts for roughly 10% of GDP. Despite this decline in economic share, the sector remains socially and politically vital, employing more than 40% of India’s workforce. This imbalance between low GDP contribution and high employment makes agriculture a sensitive area for policymaking.
• Government schemes, subsidies, and reforms often prioritize rural welfare, and rainfall, especially the monsoon, continues to be the most influential factor in determining crop output, rural income, and food inflation.

India’s Two Monsoon Seasons

• India’s agricultural calendar is governed by two major monsoon spells: the Southwest Monsoon and the Northeast Monsoon. The Southwest Monsoon begins in June, originating from Kerala and sweeping across most of the country until September.
• It delivers nearly 75% of India’s annual rainfall and is critical for sowing Kharif crops such as rice, cotton, pulses, maize, and groundnut. Farmers typically begin sowing in late May or early June, with harvesting taking place after the rains subside in October.
• The Northeast Monsoon, on the other hand, occurs between December and March. It primarily affects Tamil Nadu, parts of Andhra Pradesh, and eastern India. This season supports the Rabi crop cycle, which includes wheat, mustard, gram, coriander, and barley.
• Sowing begins in November, and harvesting is completed by March or April. These two monsoon phases create a rhythm that defines India’s agricultural output and trading cycles.

Kharif vs. Rabi Crop Cycles

• The Kharif season begins with the arrival of the Southwest Monsoon. Crops are sown between May and June and harvested around September to October. Major Kharif crops include rice, cotton, pulses, and millets.
• The Rabi season follows the Northeast Monsoon, with sowing taking place in November and December and harvesting occurring in March and April. Rabi crops include wheat, mustard, gram, and coriander.
• Rice and wheat are India’s staple grains and together contribute nearly 40% of the country’s total food grain production. Their performance has a direct impact on food inflation, government procurement policies, and export decisions. A good monsoon season typically leads to a strong harvest, while erratic rainfall can disrupt supply and affect prices across the board.

Rainfall’s Impact on Commodity Prices

• Rainfall influences commodity prices in several ways. Adequate rainfall expands the sowing area, allowing farmers to cultivate more land. Balanced rainfall improves crop health and yields, while poor or excessive rainfall can damage crops and reduce harvest volumes. These fluctuations directly affect market sentiment. Traders closely monitor forecasts from the India Meteorological Department (IMD), as well as crop sowing reports and news of weather-related damage.
• For instance, a weak Southwest Monsoon can reduce the output of cotton and pulses, leading to price spikes. Similarly, excessive rain during the harvest period can damage sensitive crops like cardamom or Mentha, tightening supply and pushing prices higher. These dynamics make rainfall a key variable in Agri commodity trading.

Monitoring Crop Progress

• The Ministry of Agriculture publishes weekly updates on sowing and harvesting progress, which are widely reported in financial newspapers and government portals. These updates help traders anticipate supply trends, adjust their positions in Agri futures, and align their strategies with seasonal cycles.
• As of 2025, the Rabi sowing data shows that wheat has been sown across 30.2 million hectares, mustard across 7.1 million hectares, and gram across 9.5 million hectares. The total Rabi sowing area stands at 61.3 million hectares. Such data provides valuable insights into expected output and potential price movements.

Agri Commodities on MCX

• The Multi Commodity Exchange (MCX) offers several agricultural contracts for trading. These include cardamom, Mentha oil, cotton, castor seed, crude palm oil, and kapas. Among these, cardamom and mentha oil are particularly favoured by active traders due to their higher liquidity, tighter bid-ask spreads, and more efficient price discovery.
• Unlike metals and energy contracts, which trade until late evening, agri commodity contracts on MCX are available for trading only until 5:00 PM. This timing aligns with the operational hours of physical mandis and reflects the nature of agricultural markets.

Trading Strategy Tip

• For those engaged in agri commodity trading, it is essential to stay informed about monsoon forecasts, crop sowing progress, and harvest updates. Aligning trades with seasonal cycles—Kharif and Rabi—can improve timing and reduce risk. Traders should focus on current-month contracts, which typically offer better liquidity and tighter spreads. While price action remains the primary guide for short-term trades, understanding the underlying fundamentals—especially rainfall and crop data—can provide a strategic edge.

Cardamom Price Trend – October 2025

• Cardamom futures have shown a firm upward trend in recent months, driven by tight supply and strong demand during the festival season. Prices for the October expiry contract are hovering between ₹2,800 and ₹2,935 per kilogram. Auction data from the Spices Board indicates average prices between ₹2,600 and ₹2,700, with peak bids crossing ₹3,200 in Idukki.
• The rally is largely attributed to erratic rainfall in Kerala, which has reduced arrivals, and robust buying from both domestic and export markets. The reintroduction of delivery-based contracts on MCX has also improved price transparency and participation.

Mentha Oil Price Trend – October 2025

• Mentha Oil futures are currently trading around ₹922.50 per kilogram, with recent highs near ₹941.50 and lows around ₹915.10. The market has remained range-bound, forming a symmetrical triangle pattern on technical charts, which suggests a potential breakout or breakdown.
• Demand from the pharmaceutical and FMCG sectors has remained steady, but oversupply concerns from distillation units in Uttar Pradesh have capped the upside. Traders are closely watching seasonal volatility and export orders to gauge the next move.

Cotton Price Trend – October 2025

• Cotton 29mm futures are priced between ₹55,500 and ₹55,800 per bale, down from earlier highs of ₹62,600. The market has softened due to global oversupply and cautious buying from domestic textile mills. Delayed harvests in both India and the United States, caused by weather disruptions, have added uncertainty.
• Despite this, domestic mills are holding back purchases, waiting for clearer price signals. The overall sentiment remains cautious, with traders monitoring inventory levels and export demand.

16.3 Cardamom Futures: A Spice-Driven Market with Seasonal Complexity

Varun: Isha, cardamom seems to be in demand lately. What’s driving the rally?

Isha: Erratic rainfall in Kerala has reduced supply, and festive demand is peaking. Plus, export orders are strong.

Varun: So it’s a Kharif crop?

Isha: Yes—sown during the Southwest Monsoon and harvested by December. It’s sensitive to rain, pests, and auction volumes.

Varun: And MCX offers delivery-based contracts?

Isha: Correct. No mini version. Each lot is 100 kg, and liquidity is best in the current-month contract.

Origin and Global Context

Cardamom is a high-value spice cultivated primarily in the southern Indian states of Kerala and Karnataka, with Kerala’s Idukki district being the epicentre of production. The variety grown in India is known as Small Cardamom (Elettaria cardamomum). India holds the position of the second-largest producer globally, but it is the largest consumer, with cardamom deeply embedded in culinary traditions, especially in sweets, masala chai, and festive dishes.

Globally, Guatemala is the largest producer, but its cardamom is primarily grown for export. This creates a unique dynamic: while Guatemala influences global supply, India’s domestic demand drives internal price movements.

Usage and Cultural Significance

Cardamom’s appeal goes beyond taste. It is used in Ayurvedic medicine, oral care, and aromatherapy, thanks to its antibacterial and digestive properties. However, in the context of trading, its primary demand comes from the food and beverage sector, with seasonal spikes during festivals like Diwali, Eid, and weddings.

Seasonality and Crop Cycle

Cardamom is a Kharif crop, meaning it is sown during the Southwest Monsoon (June–July) and harvested between October and December. The crop is highly sensitive to rainfall, humidity, and temperature. Even slight deviations in monsoon patterns can affect flowering, pod formation, and yield quality.

The quality of cardamom, defined by its size, colour, aroma, and oil content, plays a major role in determining auction prices. Lower-quality pods fetch significantly less, even if volumes are high.

Key Price Drivers

Cardamom prices are influenced by a mix of domestic and international factors:

• Rainfall in Kerala: A weak monsoon reduces yield, while excess rain can damage pods.
• Pest and disease outbreaks: Insect attacks or fungal infections can devastate plantations.
• Auction volumes: Weekly arrivals at Spices Board auctions in Vandanmedu and Puttady affect short-term price sentiment.
• Guatemalan stock levels: If Guatemala exports aggressively, global prices soften.
• Festive demand: Domestic consumption spikes during festivals, pushing prices higher.
• Export orders: Demand from West Asia and Europe adds volatility.

MCX Cardamom Futures – Contract Specifications (2025)

Cardamom is traded on MCX as a single variant contract—there is no mini version. It is a delivery-based contract, meaning physical settlement is possible if held to expiry.

October 2025 Snapshot

As of October 2025, the Cardamom futures contract is trading between ₹2,800 and ₹2,935/kg, reflecting tight supply and strong demand. The contract value at ₹2,900/kg is:

The NRML margin required is approximately ₹30,450, which is around 10.5% of the contract value. There is no MIS margin for cardamom or any Agri commodity on MCX. This is due to the high volatility and frequent circuit limits, which make intraday unwinding risky. Traders must use NRML orders even for same-day trades.

Contract Lifecycle and Liquidity

Cardamom contracts follow a six-month rolling introduction cycle. For example, in January 2025, the June 2025 contract is introduced and remains active until 15th June 2025. Every contract expires on the 15th of the month, not the last trading day.

Liquidity is concentrated in the current-month contract, making it the preferred choice for active traders. As of 23rd October 2025, the November 2025 contract is the most liquid, since the October contract expired on the 15th.

Trading Strategy Considerations

• Focus on current-month contractsfor better liquidity and tighter spreads.
• Monitor Spices Board auction datafor weekly price trends and arrivals.
• Track rainfall updatesfrom IMD, especially for Idukki and Wayanad.
• Watch for export ordersand festive demand spikes.
• Use price action and seasonal cuesrather than relying solely on fundamentals.

16.4 Mentha Oil: A Volatile Commodity with Global Reach

Varun: Isha, Mentha Oil looks volatile. What makes it so unpredictable?

Isha: It’s influenced by rainfall in UP, export demand, and even USD-INR movements. India is the top producer and exporter.

Varun: So currency plays a role too?

Isha: Definitely. A weaker rupee boosts export value. Plus, seasonal volatility and distillation reports add to the mix.

Varun: And the MCX contract?

Isha: It’s delivery-based, with a 360 kg lot and ₹36 per tick. High tick value makes it attractive for active traders.

Mentha, commonly known as mint, is an aromatic herb widely used in Indian cooking. Beyond its culinary use, the leaves are distilled to produce Mentha Oil, a high-demand extract traded actively on the MCX. This oil finds applications across multiple industries food processing, pharmaceuticals, perfumery, cosmetics, and flavouring making it one of the most versatile Agri commodities in India’s futures market.

India is the largest producer and exporter of Mentha Oil, with major shipments going to countries like the United States, China, and Singapore. This global exposure makes the Mentha Oil contract sensitive to USD-INR exchange rate fluctuations, especially during export-heavy months.

Factors Influencing Mentha Oil Prices

Mentha Oil prices are shaped by a combination of domestic and international variables:

• Rainfall in Uttar Pradesh, the primary cultivation region, affects crop health and oil yield.
• Insect infestations or fungal outbreaks can reduce output and quality.
• Crop acreage reports from Barabanki, Rampur, and Sitapur districts influence supply expectations.
• Export demand and currency volatility impact pricing, especially when the rupee weakens against the dollar.

Seasonal volatility is common, with prices spiking during lean arrival periods or when export orders surge unexpectedly.

MCX Mentha Oil Futures – Contract Specifications (2025)

Mentha Oil is traded as a single variant contract on MCX. It is a delivery-based contract, and its structure is unique among Agri commodities due to its high tick value.

Mentha Oil is one of the few Indian contracts with a ₹36 profit/loss per tick, making it attractive for traders seeking high tick-value instruments.

October 2025 Snapshot

As of October 2025, Mentha Oil futures are trading around ₹922.50/kg, with recent highs near ₹941.50 and lows around ₹915.10. At ₹923/kg, the contract value would be:

The NRML margin requirement is approximately ₹28,244, which translates to about 8.5% of the contract value. Like other Agri commodities, Mentha Oil does not offer MIS margin due to its volatility and frequent circuit limits. Traders must use NRML orders, even for intraday positions.

Contract Lifecycle and Trading Strategy

Mentha Oil contracts are introduced monthly, with a five-month forward cycle. For example, in October 2025, the March 2026 contract would be introduced. However, liquidity is concentrated in the current-month contract, making it the preferred choice for active traders.

Given its sensitivity to weather, currency, and export trends, Mentha Oil is best traded using a combination of technical analysis and seasonal cues. Traders often monitor distillation reports, arrival volumes, and IMD rainfall updates to anticipate price movements.

16.5 Key Takeaways

• Agri commodities are highly sensitive to weather, especially monsoon patterns and rainfall distribution.
• Monsoon forecasts can make or break trades, as they directly impact crop output and price trends.
• India’s two monsoon seasons govern Kharif and Rabi cycles, shaping sowing and harvesting timelines.
• Rainfall affects sowing area, crop health, and yield, making it a key variable in agri trading.
• Cardamom is a high-value Kharif spice, with prices driven by rainfall, auction volumes, and festive demand.
• MCX cardamom contracts are delivery-based, with no mini variant and expiry on the 15th of each month.
• Mentha Oil is globally traded, with India as the top producer and exporter.
• Mentha prices react to rainfall in UP, export orders, and currency fluctuations, especially USD-INR.
• Mentha Oil contracts have high tick value, making them suitable for traders seeking volatility and momentum.
• For both cardamom and mentha, liquidity is best in current-month contracts, and seasonal cues are vital for timing trades.

16.6 Fun Activity: “Seasonal Detective”

Match each crop to its season and rainfall-sensitive region.

Answer Key:

• Mustard → Rabi crop → Rainfall in Rajasthan
• Cotton → Kharif crop → Rainfall in Maharashtra
• Wheat → Rabi crop → Rainfall in Punjab

Soyabean → Kharif crop → Rainfall in Madhya Prades