A poor quality crop in 2010, weather, the lack of convergence between futures and cash and falling export demand continue to challenge U.S. rice production, according to Carl Brothers, Riceland Foods senior vice president.

The 2010 heat-damaged U.S. rice crop “was the probably the worst crop I have had the opportunity of handling in my 47 years with Riceland, speaking at the Mid-South Farm and Gin Show, in Memphis. “For the most part, it didn’t mill well. It didn’t have a very good appearance. It just didn’t have any luster.”

U.S. rice producers “paid the price around the world,” Brothers said. “We had to ship that rice on contracts, and there was nothing else to ship. We hurt our reputation, there is no doubt about that. We’ve got to rebuild that reputation.”

Brothers noted that long-grain, milled rice exports “are down 33 percent to date. Rough rice exports are also down 33 percent, which surprised me. It has to be the impact of the 2010 crop.”

Rice production in Asia is creating both opportunities and pitfalls for U.S. export prospects, Brothers said.

For example, in China, where 50 percent of the rice in the world is grown, “We know there are problems with food supply. We also know there are problems with water in India although they are a big exporter. It appears we can have good opportunities in rice if we can be patient.”

Thailand’s intervention program has also taken rice off the market, noted Brothers. “Thailand’s exports are projected down to 6.5 million tons, 20 percent of world trade. Typically, Thailand is up around 10 million tons. But the intervention program guarantees farmers $10 a bushel-plus for rice. They’re buying the rice from the farmers, putting it in storage, and at some point, they will have to sell it.

“Short-term, this is friendly to the market. Long-term, the stocks hang over the market. The word is that they’ve purchased 6 million tons of rice to date under the intervention program. They’ve removed that rice from the market.”

In July of 2011, world rice prices were again pressured as India lifted its ban on exports after a bumper rice crop, putting 6.5 million tons on the market.

Brothers noted that total world exports are projected at 32 million tons, less than 7 percent of the total production in the world.