HAMBURG, May 19 (Reuters) - Iraq's state grains buyer

remains in talks about buying around 100,000 tonnes of rice to

be sourced from the United States, with no purchase yet made,

European traders said on Friday.

Offers were submitted on May 15 and must remain valid until

May 21, they said. [nL8N1ID372]

    Traders said the trade ministry in Iraq, a major global

buyer of wheat and rice, had sent out price inquiries to trading

houses about buying the rice rather than issuing a formal

international tender.

    Only two offers were made for nearby prompt shipment, they

said.

    One U.S.-based multinational trading house offered $587 c&f

for 100,000 tonnes and a Middle Eastern trading company offered

40,000 to 60,000 at $595 a tonne c&f.

    "Iraq normally says a minimum of three offers should be made

for grains and rice purchases so a cancellation is expected, but

it is not clear if this is a formal tender," one European trader

said. "The rather tight supplies of U.S. rice available for

shipment up to the end of June make this sale anyway difficult

for exporters."

    Iraq's cabinet authorised the trade ministry on May 9 to

make direct purchases of wheat and rice to guarantee food

security. [nL8N1IB6YY]

    Baghdad has been struggling to import grains and rice for

its food subsidy programme after introducing new payment and

quality terms which left trading houses unwilling to participate

in its international tenders.

    Iraq told suppliers earlier this year it would pay for its

grain in instalments. Traders said they were informed by Iraq's

Grain Board that low oil prices and other financial factors were

forcing the country to delay payments.