UPDATE 1-INTERVIEW-Vietnam ready to sell rice to Manila

* Hanoi may soon start talks to sell 1.5 mln T rice to Manila

* Vietnam keen on extending 3-yr supply deal with Philippines

* Manila looking at "indicative price" at tender before talks

* Vietnam says can sell rice to India (Adds quotes, details)

MACTAN, Philippines, Oct 29 - Vietnam, the world's second-biggest rice exporter, is likely to start inter-goverment discussions with the Philippines to supply 1.5 million tonnes of rice for 2010 after a Manila tender on Nov. 4, an industry official said on Thursday.

"We are in a position to supply rice to the Philippines. We will give priority to supply to the Philippines 1.5 million tonnes, subject to their demand," Huynh Minh Hue, secretary general of the Vietnam Food Association, told Reuters on the sidelines of a rice conference in Cebu.

Hue said Hanoi was also keen on extending a three-year agreement ending in 2010 to sell 1.5 million tonnes of rice annually to Manila, the world's largest buyer of the grain.

"We give priority to the Philippines because this is our main market," said Hue.

"We have a very good relationship with the Philippines."

Manila struck the three-year deal with Hanoi in 2008 to secure supply of the staple at a time when grain prices surged to record levels.

Vietnam sold 1.5 million tonnes of rice to the Philippines in a government-to-government deal in January, accounting for about 85 percent of Manila's total 2009 imports of 1.775 million tonnes.

Manila is kicking off its 2010 rice buying programme with an import tender for 250,000 tonnes next week, and Hue said talks between the two countries for an inter-government supply deal could start after the tender.

"I think the purpose of the tender is for the Philippines to check market prices, and maybe after that they will propose to negotiate for a G-to-G contract with Vietnam," said Hue.

Manila's National Food Authority (NFA) has set a budget of 6.366 billion pesos ($133.3 million), or around $533 a tonne including cost and freight, for the tender.

Vietnam, fast catching up with No. 1 rice exporter Thailand, has reached its annual target to ship a record 6 million tonnes of rice this year, and is looking to lift exports to up to 6.2 million tonnes in 2010. [ID:nMAN543348]

Traders say Vietnam will probably secure as much as 170,000 tonnes at the tender given its lower prices vis-a-vis Thailand.

The Vietnam Food Association groups the country's rice exporters and millers, including the largest shipper Vinafood 2, the state-run firm that holds talks with Manila's NFA on government-to-government supply deals.

Hue said Hanoi could also export to India which is anticipated to become a net rice importer next year as a sharp fall in production due to drought and floods threatens to cut stocks. ($1=47.78 pesos)