Groundnut oil prices too have dropped to below Rs 4,000 per quintal. Market sources here are worried that the wide disparity in prices between the Delhi/Mumbai markets and here would see an outflow of the much needed supplies. ``The only restricting factor on such an outflow is the high transport cost,'' they said. In such an event, the local market would be hit quite hard, sources said. Current supplies are barely enough to meet demand from local manufacturers and exporters, they pointed out. But this could soon change as Tamil Nadu supplies groundnut oil regularly to as far as Madhya Pradesh. WithDelhi prices at around Rs 4,500-4,550 per quintal now, and TN prices at around Rs 3,900-3,950, it would not be too long before some enterprising traders go south to meet requirements.

While the surge in arrivals was welcome, traders said the only fly in the ointment as far as they were concerned was the poor yield of the crop. This has only confirmed earlier estimates of a shortfall in total output. The Tamil Nadu Oil and Seeds Association has now estimated that groundnut kernel yield will be a third less than the expected six lakh tonnes. ``This year's yield is going to be very poor,'' association secretary Thambu Reddy told The Financial Express. As last year's monsoons were very good, the moisture content in the soil has gone up, he said, leading to a poor per hectare yield. Reported damages to the rapeseed and mustard seed crops will also take their toll on the market here, Reddy said.

The industry is also happy on two other counts. Margins are expected to go up as the state budget has removed thefour per cent sales tax completely. Also the supply scenario is quite bright as the industry expects a staggered arrival of kernels, as sowing had been delayed in many areas. ``Arrivals should continue at current levels at least until mid-May,'' Reddy said.