CHICAGO, July 27 (Reuters) - Lumber futures on the Chicago Mercantile Exchange ran up nearly 5 percent on Monday and traded up as much as the $10 daily limit amid demand prompted by improving housing, a rising Canadian dollar slowing exports to the U.S. and forest fires in British Columbia, the largest producer of exported spruce.
"Obviously, you're in the heart of the (seasonal) shutdowns in western British Columbia and there were some fires," said Ashley Boeckholt, lumber analyst with Bloch Lumber. "It is that time of year and there's a lot of fuel out there."
But new June home sales being up more than expected likely provided the spark that took futures up the daily limit after a higher start. New home builder stocks also rose on the improved housing picture.
"I think the real fire was new home sales being up and inventory of homes falling to an eight-month low. What this market is craving is more demand than anything else," Boeckholt said.
* Sales of new single-family homes rose 11 percent in June, largest monthly rise since 2000, while the inventory of homes for sale fell to an 11-year low, Commerce Department reported.
* September lumber closed up $9 at $197 per thousand board feet, and November was up $7.90 at $202.20.
* Lightning strikes sparked more forest fires in British Columbia during the weekend and residents have evacuated homes near Lillooet, northeast of Vancouver. More fires are expected due to very dry conditions.
* Cash lumber prices have been surging since dipping to the low $160s on Wednesday, with floor sources saying some mills have raised asking prices to $184 to $190 per tbf.
* The Canadian dollar hitting a nine-month high on Monday is expected to prompt mills to curtail production further due to the strong currency making Canadian exports less attractive, traders said.
* Random Lengths on Friday quoted cash spruce at $174 per tbf, up $2 from Wednesday and down $4 from a week earlier.
* "Action in the Western S-P-F market drew traders' attention late Wednesday, as wholesalers covered shorts and some distributors quietly replenished inventories," Random Lengths said in its end of week report on Friday.

* "Plenty of speculation about market prospects for the remainder of the summer circulated, with labor talks in Canada, fire season, the U.S./Canada exchange rate, and the potential for more curtailments all cited as factors that could further tighten supplies," the reporting agency said.

(Reporting by Jerry Bieszk; Editing by Walter Bagley)

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