* Cotton hits record peak above $1.44 per lb

 * U.S. cotton prices remain at heavy discount to China

 NEW YORK, Nov 5 (Reuters) - U.S. cotton futures rose on
Friday, hitting a record peak for a fourth consecutive day and
ending higher despite losing some momentum late in the session
as the dollar rebounded.

 "The reason futures are not any higher than they are is
because the dollar is up and a lot of the other commodities are
on a net basis, unchanged," said Sharon Johnson, sr cotton
analyst at First Capitol Group in Atlanta up

 The benchmark December cotton contract CTZ0 vaulted to a
record peak at $1.4460 per lb, before ending up 1.78 cents at
$1.4223 per lb, the loftiest settlement close in history for
the market.

 In China, cotton prices rose more than 3 percent, with the
Zhengzhou Commodity Exchange's May cotton contract CCFc4 up
1,490 yuan at 31,235 yuan per tonne.

 "China has been trending higher and pulling futures with
it," Johnson said.

 For the year, cotton is up nearly 80 percent due to bullish
fundamentals. It is the best performing commodity in the
Reuters Jefferies CRB index .CRB. (Graphic:
link.reuters.com/kew48n )

 China is the world's largest cotton consumer, and is likely
to have 5 percent lower cotton output this year. Low government
stocks have made it difficult for Beijing to control prices.
[ID:nTOE6A306L]

 Demand for cotton from the Chinese mills has been surging,
with prices rising from exporters due to supply shortages and
an empty pipeline of deliverable supplies against futures.

 Analysts said U.S. cotton prices are at a heavy discount
and need to catch up to internal Chinese cotton prices of $2 to
$2.20 per lb and world prices in the closely followed Cotlook A
index, quoted at an average of $1.55 per lb.

 "Historically, the index is quoted 7-9 cents above futures,
but over the last few months the index has consistently been 15
to 20 cents above futures," said Mike Stevens, an independent
cotton analyst in Louisiana.

 "This has kept futures looking relatively cheap to the rest
of the world," he said.

 Trading conditions remained heavy. Volume traded in the
cotton market stood at 62,400 lots by 3:15 PM EDT (1915 GMT),
about 130 percent above the 30-day average at 27,160 lots,
Thomson Reuters preliminary data showed.
PRICES AT 2:57 P.M. EDT (1857 GMT):

    SETTLE     NET    PCT     LOW    HIGH  CURRENT

              CHNG   CHNG                      VOL
CTZ0   142.23    1.78   1.3%  138.55  144.60   24,019
CTH1   138.11    1.45   1.1%  134.88  140.70   25,357
TOTAL MARKET            VOLUME                 OPEN  INTEREST

          CURRENT    Nov 04   30D AVG     Nov 04  NET CHNG
ICE Cotton    62,400    39,803    27,614    238,564      -257