The global cotton inventory in the upcoming 2013/14 season will be 3 percent smaller than the 93 million bales currently predicted by the US government due to shrinking output and uncertainty about demand from China, the world's No 1 importer, according to a poll of nine co-operatives, traders and analysts. The carryover for the upcoming marketing season which starts on August 1 will rise just over 1 percent to a fresh high of 88.9 million 480-lb bales, the median forecast from the poll showed.

Cotton futures extended gains to a more than two-month high on Thursday on trade short-covering and continued investor buying following US government reports indicating continued strong demand and tightening US supplies, dealers said. The most-active December cotton contract on ICE Futures US closed up 1.08 cents, or 1.2 percent, at 89.15 cents a lb, after reaching 89.28 cents, the highest level since early April.

The fluctuations observed during the day: