NEW YORK, Nov 8 (Reuters) - U.S. cotton futures closed at
an all-time high on Monday, rising the daily trading limit, due
in part to strong Chinese cotton prices and a steady barrage of
trade buying in the market, analysts said.

Cotton is the best performing commodity on the Reuters
Jefferies Commodity Index, having risen nearly 90
percent in value year to date.

(Graph: http://link.reuters.com/kew48n)

Tight supplies in China, the world's No. 1 cotton consumer,
have driven internal values up in the Asian nation to levels
well above $2 per lb, preventing any kind of correction from
cooling cotton futures, they said.

The benchmark December cotton contract on ICE
Futures U.S. climbed the 4-cent daily trading limit to finish
at $1.4623 per lb, with the session low at $1.4315. The market
had risen for seven straight sessions.

Volume traded, however, was modest at best. The total
amount traded in the U.S. cotton market reached 23,897 lots at
2:45 p.m. EST (1945 GMT), nearly 20 percent below the 30-day
average of 29,173 lots, Thomson Reuters preliminary data
showed.

In China, prices for the key May cotton contract on
the Zhengzhou Commodity Exchange hit a lifetime top of 33,295
yuan per tonne and last traded at 32,970 yuan, up 1,950 yuan on
the day.

'It's all out of China,' Sharon Johnson, a cotton expert at
First Capitol Group in Atlanta, said when asked for the
catalyst behind Monday's rally.

'The fundamental factor for the rise (in cotton prices) is
because of shortages,' said Yang Guoqi, an analyst with Jinshi
Futures Co Ltd.

The market took note of news that China's government has
ordered a crackdown on illegal activities aimed at driving up
prices, the official Xinhua news agency said.

With Chinese internal prices running well above $2 per lb
and average world prices in the closely followed Cotlook A
index quoted on Monday at $1.618 per lb, U.S. cotton prices are
at a heavy discount and need to catch up.

The Cotlook A index normally runs at a
premium of 7 to 9 cents above New York cotton futures, but the
index has been running at a premium above 10 cents the past few
weeks.

Traders said that while the announcement by Beijing would
be welcome, the market would be looking for specific actions to
cool the Chinese cotton market.
'We'd want to see if they can get this thing settled down.
The market is way overheated,' said one trader.