India: Karnataka rice prices rise over 25% amid rainfall deficit and water shortages

• Sona Masoori, RNR and Kolam rice prices rise INR 15-20/kg
• Lower paddy cultivation and panic buying tighten supplies

Rice prices in Karnataka have risen by more than 25% over the past two to three weeks, driven by deficient rainfall, water shortages and panic buying.  Prices of key varieties, including Sona Masoori, RNR and Kolam rice, have increased by around INR 15-20/kg, while higher paddy prices have added to cost pressures for rice millers and traders.

Key varieties see sharp price increases

Wholesale prices of Sona Masoori have increased to around INR 70/kg from INR 55/kg, while RNR rice prices have risen to around INR 75/kg from INR60/kg. Kolam rice prices have increased to around INR 85/kg from INR 70/kg. The increase has been attributed to tighter availability following lower paddy cultivation in some areas affected by inadequate irrigation. Farmers in parts of the Cauvery basin reportedly reduced or avoided paddy cultivation after irrigation water was not released. Concerns over reservoir levels have further increased uncertainty around upcoming supplies, while panic buying has added to near-term demand pressure.

Water availability remains key

Market participants are closely monitoring rainfall and irrigation conditions, as improved water availability could support fresh paddy cultivation and ease supply concerns later in the year. However, continued rainfall deficiency and limited reservoir water could constrain paddy production and keep rice prices firm. Higher paddy prices are also increasing procurement costs for millers and traders. Fresh paddy arrivals later in the year could provide some relief if water availability improves and cultivation recovers. Until then, market participants are expected to closely track rainfall, reservoir levels, paddy acreage and rice prices across Karnataka.

Outlook

Rice prices in Karnataka are likely to remain firm in the near term as deficient rainfall, water shortages and panic buying continue to constrain availability. Further price gains could depend on the extent of supply tightness and the pace of replenishment in wholesale markets. Improved rainfall and irrigation availability could support paddy cultivation and fresh arrivals later in the year, potentially easing prices. However, if water availability remains inadequate and paddy acreage stays below normal, limited supplies could keep prices elevated for longer.