Rice prices have been falling in response to high production, with the 2011-12 crop set to break records.

“In contrast to other grains, rice export quotations fell steadily over the period in the face of ample supplies, especially in South Asia,” the International Grains Council (IGC) said in its January Grains Market report, which covered events since the previous report in late November. “Recent falls in ocean freight rates helped to trim import costs for many buyers.”

The IGC predicted a rise in global production of 2% to 459 million tonnes “because of increases in Asia, notably in China and India.”

Global use will rise by 10 million tonnes to 458 million, while stocks in the five main exporters will rise by 10% to a record 31.9 million due to increases in India and Thailand. Trade in calendar 2012 is forecast to contract by 8% to 31.5 million tonnes, “owing to significantly reduced shipments to markets in Far East Asia.”

The IGC explained that China and India have together accounted for more than half the global output since 2003. It forecasts 2011-12 production in China at 140.4 million tonnes, up 3.3 million from the previous year. “Much of the increase will be due to larger plantings, with yields seen improving only marginally,” it said. “In India, sowings of this year’s kharif crop were boosted by a favorable Southwest monsoon.”

It puts production from India’s main crop at a record 87.1 million tonnes, up from 80.7 million. “With prospects for the smaller, irrigated rabi outturn also positive following ample rains, total output in 2011-12 is projected at a record 101 million tonnes (95.3 million).

There are falls in production for some of the main exporters.

“Severe flooding in Thailand resulted in significant main crop losses, but farmers are expected to partly compensate by increasing plantings for the country’s second crop,” the IGC said. It predicted a fall in 2011-12 production of 6% to 19.2 million tonnes. Vietnam’s production is set to fall to 25.5 million tonnes from 25.9 million.

However, production in Pakistan is predicted to increase by 40% to 6.6 million tonnes.

“South American rice output in 2011-12 is expected to fall by 13% from last year’s exceptional 17.2 million tonnes, largely due to a steep fall in Brazil,” it said. “The latest official crop forecast (paddy basis) for that country is 11.5 million tonnes, representing a decline of 16% from the previous year. This follows a marked fall in plantings owing to higher production costs and reduced water availability.”

The Thai Rice Exporters Association is expecting a fall in the country’s rice exports to between 6.5 and 8 million tonnes from last year’s 10.5 million tonnes. The association’s president, Korbsook Iamsuree, said that rice exports face many obstacles this year.

“A major factor is India’s export policies with India resuming rice exports after a three-year suspension,” she said. “It has already allowed exports of two million tonnes of rice and added rice export permissions are likely to negatively impact Thai exports, in particular white rice and parboiled rice, which could drop by another 1.5 million tonnes.”

The government’s rice mortgage scheme makes Thai rice more expensive than the competition, and other countries had increased exports. Currently, Thai rice is the world’s most expensive, said the Thai Rice Exporters Association.

U.S. exports are also slow. “The pace of exports and sales of long-grain rice is lagging based on U.S. Bureau of Census data through October and U.S. Export Sales data through December,” the latest USDA World Agricultural Supply and Demand Estimates Report said. “Long-grain exports to the Western Hemisphere have been lagging due to competition from South America, principally Brazil. Additionally, long-grain exports to the Middle East have been lagging due to strong competition from other suppliers.”