Rice prices steam up in Indian domestic market on demand-supply gap, deficient monsoon
India’s rice prices have risen over 10% amid tight supply, strong demand and concerns over a deficient monsoon. Higher paddy MSP, limited premium rice availability and ethanol demand are supporting prices, while market participants expect prices to ease when fresh kharif arrivals and OMSS supplies increase.
Rice prices, particularly non-basmati, in the Indian domestic market have increased over 10 per cent in the past few weeks due to a demand-supply gap and fears of a deficient monsoon, industry stakeholders said.
The Centre’s decision to increase the minimum support price (MSP) for paddy during the 2026-27 crop year (July-June) to ₹2,441 a quintal (up from ₹2,369) for the common variety has also aided the uptrend, said Rajesh Jain Paharia, a New Delhi-based exporter.
Supply Deficit
The demand-supply gap is greater for premium varieties such as Sona Masuri, Ponni and Masuri. However, its impact is felt even in broken rice prices.
“Though rice prices are up, they seem to have stabilised for now. But millers say prices usually rise at this point in time, and this year, the increase is more. They are reporting a slight shortage in paddy,” said M Madan Prakash, President of Tamil Nadu Agri Commodities Exporters Association.
“It is a case of demand and supply despite the Centre saying rice production was record high in the 2026-26 crop year. But this might result in headline inflation, as the RBI fears,” said a New Delhi-based analyst, adding that millers do not have ample supply.
Jain said the price rise is primarily due to the supply-demand situation. “Prices of some premium varieties have increased, and it is reflecting across all varieties,” he said.
“Prices have gone up for premium white, parboiled and steamed rice of late. Quality old white rice commands up to ₹1,900 per 26-kg bag, while the new one costs ₹1,600,” said a trader in North Chennai.
Prices of rice have increased by at least ₹10 a kg as paddy rates have increased.
Prakash said prices of the Swarna variety, available in West Bengal, have increased to ₹34 a kg ex-mill from ₹30 in the past few weeks.
The analyst said that due to a deficient monsoon, rice prices have tended to rise. “Even basmati prices are up. On the other hand, the area under maize is low. As a result, rice will be in demand for ethanol production,” he said. As of August 7, the monsoon was 11 per cent deficient.
He said rice prices are also up because arrivals of the zaid (summer) and rabi crops are over. The kharif arrivals are due only after October.
With the government sticking to the “historical statistics system”, there is a gap in the production data. “Similarly, there could be some gap in the record stocks with the Food Corporation of India,” the analyst said.
The Ministry of Agriculture, in its third advance estimate, pegged rice production at a new record of 154.02 million tonnes. As of July 1, the FCI had 40.31 million tonnes (mt) of rice and 38.74 mt of paddy, which can yield almost 26 mt of rice.
Jain said prices may drop once the open market sale scheme (OMSS) picks up. “But right now, the rice quality is ‘just marketable’. So no one is coming forward in the OMSS tender,” he said.
Pointing to the soaring prices of premium non-basmati varieties, the analyst wondered what happened to the committee set up to look into consumer-preferred rice varieties. “When will the committee submit its report?” he asked.
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Source: The Hindu Businessline
