By Apornrath Phoonphongphiphat and Pracha Hariraksapitak

BANGKOK, July 31 (Reuters) - Thailand, the world's largest rice exporter, is in talks to sell at least 850,000 tonnes of rice to Iran and Nigeria after government stocks swelled this summer, helping dispel any lingering concern over world supplies.

Benchmark Thai rice prices have already fallen by about a third after surging nearly three-fold to a record high in April, and news of Bangkok stepping into the market to meet demand from two of the world's top importers is likely to knock them further.

Nigeria is looking to buy 250,000 tonnes and Iran 600,000 tonnes, the same quantity it has bought from Thailand in previous years, government spokeswoman Suparat Nakboonnam told Reuters.

"We need to spend a couple of months working on the details. It will not take longer than that," she said.

The first release of state-held stocks since November 2006 comes after inventories rose by more than a fifth to 2.57 million tonnes since January.

The government has stepped up buying to support farmers who rushed to plant extra crops after prices shot from below $400 in January to $1,080 in April, and this programme should keep a floor under prices at the $700 a tonne minimum the government guarantees to farmers.

Finance Minister Surapong Suebwonglee, who chaired a National Rice Committee meeting on Thursday, said the government would continue to sell off bits of the stockpile after the Iranian and Nigerian deals were completed.

"We will sell gradually as we don't want the sales to hurt Thai rice prices," he told reporters after the meeting.

But exporters said the two deals would push prices down at least 4 percent over the next weeks due to a perceived absence of more demand from the two countries.

Benchmark Thai 100 percent B grade white rice RI-THWHB-P1 slid to $730 per tonne on Thursday from $750 last week.

"The price of white rice could drop significantly to a floor price of $700 per tonne," Chookiat Ophaswongse, the president of Thai Rice Exporters Association said.

The floor price comes from a government scheme to support Thai farmers by buying paddy rice from them at 14,000 baht per tonne, equivalent to $700 per tonne of milled rice.

Thailand tends to hold a large stockpile, the consequence of domestic price schemes that are launched most years.

In 2005, the stockpile swelled to nearly 5 million tonnes, a major headache for the government due to storage costs and the losses it frequently makes when it releases the surplus onto the market.

"I heard that Iranian offials are shopping around in Vietnam, bargaining to buy at around $500 per tonne, but no deal has been done as Vietnamese traders said the price was too low," one trader said.

This week, Vietnam cut the floor price of its 5 percent broken grade white rice to $600 per tonne amid signs of a bumper global harvest spurred partly by rice's surge above $1,000 tonne earlier this year, which encouraged heavy planting.

Thailand is expecting to harvest 7.6 million tonnes of paddy during the August-September period, up from around 4 million tonnes in the same period of last year, according to Agriculture Ministry data. (Editing by Ed Cropley and Jonathan Leff)

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