NEW YORK, April 29 (Reuters) - U.S. cotton futures rallied
to Friday's daily limit, chalking up steep gains for the last
day in April, along with most other commodities, as many
investors rotated into hard assets believing the U.S. Federal
Reserve would keep money cheap for awhile.

'I think a lot of people realized after the Fed's press
conference (on Wednesday) that easy money is here for a while,'
said Sean McGillivray, head of asset allocation for Great
Pacific Wealth Management in Oregon, noting nearly all
commodities advanced on Friday.

Most-active July cotton on ICE Futures U.S. closed
with 6.0 cent gains, the upside daily limit, at $1.5802, a 3.95
percent increase. New-crop December cotton rallied 4.35
cents, or 3.44 percent, to $1.3093 cents a lb. by settlement.

May cotton gained 5.96 cents, a 3.45 percent rise,
to end at $1.7878 per lb.

Analysts were puzzled by the sharp gains in May, which
expires on May 6 and is in the middle of deliveries.

Only 167 delivery notices have been issued to date. Yet,
open interest in the May contract still seemed high, with 5,229
lots at the start on Friday, for a contract that has been in
delivery period all week. Open interest declined only minimally
from 5,350 lots at the end on Wednesday.

For the benchmark July contract, the session began with
follow-through panic selling, but brokers noted that the
selling eventually ran out of steam.

'It took very little volume to establish a 1,000 point
range to get July back to the upside,' said Mike Stevens, an
independent cotton analyst in Mandeville, Louisiana.

He added mill fixations picked up considerably under $1.50
per lb. July cotton slipped to a session low at $1.4780.

'There are 16 times more mills needing to buy to fix
(prearranged) transactions in July than producers needing to
sell,' Stevens said.

Meanwhile, December futures benefited from the speculative
investment that lifted many other commodities, as well as the
dry weather forecast in biggest U.S. producing state Texas.

On Wednesday, the U.S. Federal Reserve's policy-setting
statement confirmed it left its loose monetary policy intact
for an extended period in an attempt to bolster U.S. economic
growth, which could translate to greater cotton demand.

With U.S. interest rates remaining ultra low on likely rate
increases elsewhere the world, the dollar continued to tumble,
further helping cotton in overseas markets.

If demand should pick up, supply coming from Texas has been
put in jeopardy by drought conditions that could affect the
crop due in December if they persist.

Weather experts said Thursday, devastating drought
intensified across Texas over the last week.

Conversely, the worst floods since 1937 are expected to
swell the Mississippi River in about two weeks.

An ICE Futures U.S. release said the trading limit for all
Cotton No. 2 futures delivery months would revert to 7 cents a
lb. above and below the prior day's settlement price, from the
6 cent limit in effect on Friday.