Milo Hamilton, president and Co-Founder of Firstgrain, also told Reuters that record oil prices had increased fuel and fertiliser prices, which would reduce rice acreage planted in the United States next year.
The US Department of Agriculture (USDA) said in its October 18 report that the country's rice and sugar production sustained the most damage from Rita, which battered the southern United States just a month after Hurricane Katrina damaged crops in the region.
Referring to Arkansas, which accounts for nearly half of the US 2005-estimated crop, Hamilton said: "We know it's worse than what is the USDA is saying.
Maybe it's down by another 2 million hundredweight's probably lower than 107 million," he said on the sidelines of a rice conference in Beijing during the weekend.
The USDA report put the rice crop in Arkansas at 109.545 million hundredweight's (cwt), down from its September estimate of 112.488 million.
The total US crop is estimated at 223.238 million hundredweight's, compared with 228.338 million in September. "Part of the problem is that milling yields are down," Hamilton said, adding that a milling yield loss of 3-5 percent occurred in addition to the field loss of 8-10 percent.
OIL PRICES HERALD ACREAGE CUTS:
Looking into next year, Hamilton said US rice acreage was likely to see the largest decline in years, because high fertiliser and fuel prices were squeezing farmers' profits and because banks were reluctant to provide financing.
"In the US, the cost of production is going to have dramatic effect," he said. "I'm hearing as much as 25-30 percent acreage cuts along the Gulf coast and as much 10-15 percent cuts in Upper Delta. That's huge cuts in acreage."
He said soy or corns were cheaper because they did not require as much nitrogen input as rice.
"The problem is, bankers can't fund the farmers," he said, adding potential changes in the US farm programme, including subsidy cuts, might also reduce rice acreage.
Asked about logistics in the Mississippi River for grains following Rita, Hamilton said: "It's about ready, but not quite." "You get a lot of complications.
You get steel moving up the river, which is stealing barges away from agriculture, and you have to back up the ability to find the places to store."