NEW YORK, Dec 11: US cotton futures closed higher on Friday on investor buying in moderate trade, with analysts saying a government crop report underlined tight supplies in the market.

The benchmark March cotton contract on ICE Futures U.S. rose 1.02 cents to finish at $1.3697 per lb, trading from $1.353 to $1.4095. On the week, the market gained 3.5 per cent.

Trading volume hit about 27,336 lots, roughly a quarter below the 30-day average of 35,361 lots, Thomson Reuters preliminary data showed.

Business has recently slowed. On Thursday, cotton volume reached a three-month low of 15,036 lots, exchange data showed.

Cotton is still the best performer in the Reuters-Jefferies commodity index, up over 70 per cent in the year to date.

The March contract climbed by the 5-cent daily limit ahead of the US Agriculture Department's monthly supply report but “slowly sold off” after the release of the data, said Lou Barbera, an analyst for brokerage VIP Commodities.

The USDA estimate of 1.9 million 480-lb bales in US cotton ending stocks for 2010/11 emphasized the tight situation, traders said.—Reuters