NEW YORK, Nov 1 (Reuters) - U.S. cotton futures finished
Tuesday at a fresh all-time high on worries over tight supplies
and an overnight surge in China's cotton prices, analysts
said.

Fiber contracts rallied to close up the permitted daily
maximum of 5 cents for the second straight session as strong
demand from mills combined with speculation that with a large
chunk of the U.S. 2010/11 cotton crop already sold, there will
be a shortage by the spring.

'The demand is there,' said Mike Stevens, an independent
cotton analyst in Louisiana.

Cotton is the best performing commodity year to date,
outshining the record-setting gold market and wheat futures,
which surged higher when Russia's severe drought forced Moscow
to ban grain exports in the summer.

Cotton rose more than 20 percent in October and is up
nearly 85 percent since the beginning of the rally in July.

The ICE Futures U.S. benchmark December cotton contract closed
at $1.3426 per lb, a record since the U.S. Civil
War era. The exchange's daily limit will expand to 6.00 cents
on Wednesday.

The pace of business though was light. Volume traded stood
at 19,369 lots at 3:22 p.m. EDT (1922 GMT), about a third below
the 30-day average at 25,786 lots, Thomson Reuters preliminary
data showed.

Analysts estimate that 80 percent of the U.S. cotton crop,
which is forecast at 18.87 million (480-lb) bales, already has
been sold. They said most other major producers, such as
Central Asia and Brazil, have sold their cotton as well.

'There's no cotton around,' said Lou Barbera, a cotton
analyst at commodities brokerage VIP Commodities, explaining
the spike in cotton prices.

China's benchmark Zhengzhou Commodity Exchange cotton
contract rose to its price highest ever for the second
day on Monday at 29,255 yuan.

Open interest in both the U.S. and Chinese markets has
exploded since early September reflecting significant
speculator participation in the rallies.

In a daily note, the Commonwealth Bank of Australia said:
'Continued strong cotton prices in China remain the most
supportive influence on global prices and thus far it appears
that the higher prices are yet to sufficiently ration demand.'

Further support came from market talk that India may close
off its fiber exports, potentially exacerbating an already
tight global supply situation.

Thomson Reuters analyst Wang Tao said U.S. cotton prices,
basis the second-position March contract, could rise to $1.4116
per lb over the next four weeks as part of a wave pattern.

The March cotton contract also closed up 5.00 cents
at $1.2945 a lb.

The Cotlook A index cotton price, a global cash price
benchmark which combines the average price of the five cheapest
cotton prices in the world, plus transport, was being quoted at
$1.47 on Tuesday, a hefty premium of nearly 13 cents over New
York cotton futures.

The A Index normally enjoys a premium of 6 to 8 cents over
U.S. cotton futures. It has been running at a premium of 9 to
as much as 15 cents during the rally.

Barbera said cotton futures will grind higher so long as
cash prices, especially in No. 1 consumer China, are running at
a large premium to the benchmark ICE Futures price.