NEW YORK—Cotton prices posted their biggest drop in more than two weeks on Thursday, as U.S. growers gear up to harvest what the government expects to be the largest crop in four years.

The cotton contract that expires in December ended 1.3% lower at 66.58 cents a pound on the ICE Futures U.S. exchange. The percentage decline was the largest for a single session since Aug. 12 for the most actively traded cotton contract.

U.S. cotton farmers this year will likely harvest 17.5 million bales of cotton this season, a crop more than one-third larger than last year's, according to the U.S. Department of Agriculture.

The expected increase in the cotton supply weighed on prices, countering a report of higher demand for the fiber.

The USDA said Thursday that a net 247,700 bales of upland cotton—the most commonly grown variety in the U.S.--were sold for export in the week ended Aug. 21, up from 60% from the previous week.

However, some traders said demand in the coming weeks could pull back because cotton prices are regaining ground after falling to a near-five-year low in July. The most actively traded contract is up 5.9% this month.

Those higher prices "will put a crimp in sales," said Jordan Lea, co-owner of Greenville, S.C., cotton merchant Eastern Trading Co.