* Market climbs nearly 10 percent in week

 * USDA report, Chinese buying inspires rally
 (Adds closing cotton prices, writes through)

 NEW YORK, Oct 8 (Reuters) - Cotton futures settled on
Friday at its highest level in 15 years on investment fund and
Chinese mill buying combined with a bullish U.S. government
crop report.

 Values may push past the all-time record in the days ahead,
analysts said.

 Cotton surged before the U.S. Agriculture Department
published its much anticipated monthly supply/demand report
earlier Friday, but the market took off after the USDA's cotton
figures came out.

 China provided the catalyst. USDA sliced its estimate of
China's 2010/11 cotton production by 1.0 million (480-lb) bales
to 31.5 million, upped its Chinese import forecast to 13
million bales from 12.75 million and dropped its ending stocks
forecast for the world's No. 1 consumer to 14.72 million from
16.01 million bales.

 "We're going to go (higher) as long as the Chinese have the
appetite to buy cotton," said Mike Stevens, an independent
cotton market analyst in Mandeville, Louisiana.

 Sharon Johnson, cotton expert at First Capitol Group in
Atlanta, said sheer momentum should move the market up next
week although she is cautious that fiber contracts are getting
overextended to the topside.

 Stevens said he did feel cotton would stop at $1/lb but was
now not so sure and a challenge of the all-time record high at
$1.172 is possible.

 "I wouldn't bet against this (market)," he said.

 ICE Futures U.S. benchmark December cotton contract CTZ0
climbed the 4.00-cents limit to trade at $1.0775 per lb, the
highest level in 15-years.

 The contract gained 3.42 cents up, a gain of 3.3 percent on
the day, to finish at $1.0717 per lb. The session low was at
$1.045. On the week, December cotton futures are up almost 10
percent.

 The next three nearby months climbed the limit before
pulling back at the close of trade.

 Total volume traded stood at over 31,000 lots at 3:15 p.m.
EDT (1915 GMT), more than two-thirds above the 30-day average
around 18,000 lots, preliminary Thomson Reuters data showed.

 Technicians said the cotton market, basis the spot daily
charts are approaching overbought levels, but analysts said
funds may ignore that and keep buying cotton with demand
running at such a strong level.

 (Graphic:
here)

 Traders said cotton got a jolt higher as buyers from China,
which had been on holiday from Oct. 1 to 7, returned.

 "(The) Chinese bought strongly," said Stevens.

 Johnson said no major changes were seen in the USDA report
except for the Chinese figures. She said the USDA apparently
believes the "high (cotton) prices are not having any effect on
consumption."

 The level of fund interest in the market has not
appreciably flagged since the rally lifted cotton prices over
$1 per lb starting last week.

 Open interest in the cotton market has remained above
231,000 lots since mid-September and stood at 232,123 lots as
of Oct. 7, ICE Futures U.S. data showed.