* Friday's USDA crop estimates will be 2013/14 season first
* USDA releases May crop report at noon EDT for U.S., world
* Erratic weather resulted in wide range of crop estimates
NEW YORK, May 9 (Reuters) - U.S. cotton futures finished modestly higher on Thursday as investors built risk premium into prices ahead of the U.S. government's May supply/demand estimates, the first for the coming crop year.
The U.S. Department of Agriculture issues its new forecasts at noon EDT. Analysts have generated a wide range of forecasts for 2013/2014 U.S. cotton production, running from 14 million to over 18 million bales. The new season starts Aug. 1.
Current estimates for the 2012/2013 crop year sit at 20.65 million bales, higher than the 18.19 million bale cotton crop produced in the 2011/2012 season.
Most-active July cotton on ICE Futures U.S. closed up 0.24 cent, at 87.92 cents per lb, after hitting a one-month high for the second time in as many days. It ran up to 88.40 cents a lb earlier in the session, matching the April 11 peak.
The supply figure has challenged analysts because of unusually erratic weather patterns marked by either too little or too much rain throughout the cotton growing regions.
Plantings have been delayed by the weather for both cotton and competing crops, adding to questions about how many acres will be devoted to cotton.
"We've had a few rain storms come through here, but for the most part we're dry. And before you can get a dryland crop going you have to get more rain," said Jobe Moss of broker MCM Inc. in Lubbock, Texas which grows a large percentage of U.S. cotton.
"I think the market is going through its normal seasonal behavior, which is to build in some risk premium," he added.
Friday's USDA report will also be the first estimates for corn, wheat and soybean crops, which have also been affected by weather conditions that could cause some farmers to switch acres to cotton from other crops.
Analysts expect USDA will use plantings projection issued in late March for about 10 million cotton acres, noting that occasionally it comes up with its own assumptions that have the potential to surprise the market.
According to Keith Brown, broker at Keith Brown and Associates, prices were driven up on Thursday by "continuing delays on the plantings, plus no rain in West Texas. And although the (weekly) export sales were off, we're still selling cotton to China."
USDA reported weekly net Upland cotton export sales of 117,300 running bales for the 2012/2013, down 63 percent from the previous week and 49 percent from the prior 4-week average.
"Today's export figures were not very good. That tells me that you'll get business done around 80 to 83 cents in that neighborhood. But if you take it up to 87 or 88 cents, the business slows," said Moss.
But Brown pointed out that most of the current year's crop has already been sold and is running well ahead of schedule.
"As it stands right now, we have sold and shipped about 95 percent of our 2012/2013 USDA export projections and there are still 12 weeks left in the season," said Brown.
Aside from the USDA's new season forecasts, he noted that a potential negative factor for cotton prices would be sudden rainfall in West Texas. Dry weather in Texas, the country's No. 1 growing state, sent prices to one-month highs two days in a row. (Reporting by Carole Vaporean; Editing by Kenneth Barry)