NEW YORK, Feb 10 (Reuters) - U.S. cotton futures surged to
a fresh 150-year high on Thursday, as funds and mills continued
to chase the rising market on the specter of dwindling global
supplies.

Analysts said the benchmark contract looked poised to hit
$2 a lb in the days ahead. March cotton on ICE Futures
U.S. rose the 7-cent daily limit to finish at $1.8758 per lb,
the highest price since the American Civil War.

Trading volume was heavy near 37,600 lots, almost
two-thirds higher than the 30-day norm, Thomson Reuters
preliminary data showed.

'There's no end in sight for this (rallying) market,' said
Nick Gentile, chief of trading operations in Atlantic Capital
Advisors in Jersey City, New Jersey.

'Demand is outpacing supply, plain and simple,' he said.

Prices closed higher each day this week and broke above the
old Feb. 2 intraday record at $1.8229 on Wednesday. The 11.7
gain since Monday marks the biggest four-day rally since late
December.

Since the middle of January, cotton futures have risen by
more than a third, bolstered by overseas mill buying seeking to
lock up scarce supplies, dealers said.

The tightness has been aggravated by the fact that supplies
of cotton from the United States, the world's top exporter, are
practically gone. The trade estimates more than 95 percent of
the crop of 18.32 million (480-lb) bales has been sold.

'The market has truly reached runaway proportions,' said
Mike Stevens, an independent analyst in Mandeville, Louisiana.

Stevens said that talk of a dry spell in China, the top
producer and No. 1 consumer of cotton, and the 'fading' chance
of Indian cotton exports gave the market impetus for its
advance.

China drew down state stocks in 2010 to cool surging
domestic fiber prices. This raised the specter of inventory
rebuilding, while the country's imports in December rose 113
percent from a year earlier.

'At this point, the question is when we go to $2, not if,'
a dealer said.

The market will be looking toward the U.S. Agriculture
Department's potential plantings report on March 31 to see if
the rally will prompt more American farmers to plant cotton in
2011.

The National Cotton Council of America, an industry group,
said U.S. 2011 cotton plantings will likely reach 12.5 million
acres. The NCC survey was conducted before the current rally in
the cotton market.

A Reuters survey at the Beltwide Cotton conference this
month had forecast U.S. 2011 cotton plantings at 12.48 million
to 12.53 million acres, a 5-year high and an increase of around
15 percent from last year's sowings of 11.04 million acres.