The secular bull market in grain prices, which began in 2007, is set to expand to the rice complex following Thai government legislation to curb production to offset poor rice quality and growing pestilence.

Thailand is the world’s largest rice producer. The Southeast Asian nation sets the benchmark for global prices.

Over the last 12 months, the most heavily-traded grains in the world have almost doubled. But rice prices, as defined by benchmark Thai rice, has rallied just shy of 10%. Thai rice prices in 2011 have declined 6.5%, mainly because of a bountiful harvest over the last 12 months in the region, including the second-largest exporter, Vietnam.

Since hitting an all-time high three years ago, Thai rice prices have declined almost 45%.

Rice is one of the most important commodities in the world. Rice is produced on every continent, except Antarctica, and in 113 countries. Approximately 2.5 billion people rely on rice as their main food source.

The Thai government unveiled a plan last fall to boost rice quality after a series of attacks by pests throughout the country, reducing not only yield but the taste and texture of the grain. The government aims to reduce exports by about 2 million metric tons a year or about 20 percent of Thailand’s shipments, according to Bloomberg News.

Thai rice exports represent about 1/3 of the total annual supply or 30 million tons.

I’m bullish on rice. The entire gamut of the grains complex has started a multi-year bull market that should remain firmly supported by volatile climate change, rising populations and declining water tables.

But for the retail investor, speculating on rice prices is hard because there aren’t any ETFs or ETNs – at least not yet.

The CBOT in Chicago trades a Rough Rice contract. If you’re futures savvy, that trade makes sense and all you have to do is roll over the contract upon expiration. The trend in rice prices for the remainder of 2011 should be bullish, assuming Vietnam doesn’t offset Thailand’s supply reduction.

My colleague, Andy Hecht, a veteran commodity trader who speculates on options, can show you how to trade rice and other commodities futures. You can check out his blog here.