Benchmark cotton futures edged down on Friday for a slight weekly loss, after a string of choppy sessions dominated by liquidation from the July contract ahead of its delivery period. The most-active December cotton contract on ICE Futures US closed down 0.05 cent, or 0.6 percent, at 77.08 cents a lb.
The contract touched a more than four-month low of 76.10 cents a lb this week.
The July contract, which expires on July 9 and enters delivery period next week, settled down 0.2 cent, or 0.2 percent, at 88.16 cents a lb.
"December should be down even lower when you think of record global stocks ... but everyone is focused on a tight US situation," said Keith Brown, principal at cotton broker Keith Brown & Co in Moultrie, Georgia.
World inventories are expected to reach a whopping 102.7 million bales by the end of July 2015, high enough to satisfy global demand for nearly a full year.
Even as the top-producing state of Texas has seen much-needed rains so far this growing season, supplies in the United States are seen tightening heading into the end of the 2013/14 crop year, which runs through end-July.
Total market open interest fell to 163,108 lots on Thursday, the most recent ICE data showed. That was down sharply from 167,817 on Wednesday, to the lowest since early March.
Spread-related gyrations throughout the week's trade have stoked expectations of a potential cash delivery against the July futures contract.
The front-month's premium above the third-month December contract, which represents the new crop, fell to 11.08 cents a lb on Friday, from this week's peak of 13.96 cents a lb. That was the highest such premium since 2011. The market backwardation, with spot prices trading at a premium, is often seen as evidence of tight nearby supplies.
While weekly US government data showed lacklustre weekly sales of bales booked for the 2014/15 crop year, sales of cotton booked for the current season beat expectations, reinforcing worries of tight US supplies heading at the end of 2013/14.
Exchange inventories rose to an 11-month high of 433,997 bales on Thursday from 427,727 bales on Wednesday, ICE data compiled by Reuters showed.