NEW YORK, Jan 24 (Reuters) - U.S. cotton futures finished
Monday at its highest level in almost 150 years, spurred by
tight supplies in the United States and in China as the
market's rally shows no sign of slowing down soon.

Cotton prices staged matching rallies, with U.S. fiber
contracts hitting a record high after rising nearly 15 percent
since Jan. 14. The Chinese cotton market, on the other hand,
gained over 11 percent since the middle of the month.

(Graph on U.S. and Chinese cotton market:

http://r.reuters.com/gen67r)

The key March cotton contract on ICE Futures U.S.
rose the 5-cent limit to close at $1.6194 per lb, with the low
for the day at $1.605.

Volume though was at 14,800 lots, about a fifth below the
30-day norm, Thomson Reuters preliminary data showed.

In China, the key September cotton futures on the
Zhengzhou Commodity Exchange was last done at 32,120 yuan per
tonne, up 1,620 yuan on the day.

'The market's gone frenzied on Chinese demand, tight supply
and fears of drought in the U.S.,' said Keith Brown, president
of commodity firm Keith Brown and Co. in Moultrie, Georgia.

Chinese sales of cloth are expected to pick up in the
spring amid tight domestic supplies, said Yang Guoqi, an
analyst with Jinshi Futures.

Despite the high prices, a key U.S. retailer said it should
be able to absorb the escalation in cotton values.

J.C. Penney Chief Executive Myron Ullman said the
company was in a strong position in terms of cotton cost
increases and that it was done buying for the year.

In the United States, Brown said the deliverable supplies
to the old-crop contracts such as March, May and July were very
tight because the trade believes 95 percent of the U.S. cotton
crop has been sold. Only U.S. cotton can be delivered at the
exchange.

U.S. cotton stocks deliverable against the ICE Futures U.S.
exchange stood at 123,853 bales as of Jan. 21, down almost 90
percent from the 2010 top of 1.08 million bales in early June,
exchange data showed.

Brown said Chinese firm are apparently buying cotton at
this time ahead of the Lunar New Year because they feel prices
will head higher.

He added there is also growing concern about the very dry
conditions being caused by the La Nina weather anomaly in
places such as Texas, the top cotton-growing state.

FOCUS TO TURN TO US 2011 PLANTINGS

Analysts said the market would be waiting for further leads
in the coming days, but attention should gradually turn toward
U.S. 2011 cotton spring plantings.

The market will be waiting for the closely watched cotton
potential plantings survey by the National Cotton Council. The
results of the survey will be handed out at the industry
group's annual meeting in San Diego next week.

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