NEW YORK Aug 29 (Reuters) - Cotton futures inched down on Friday, pressured by expected large supply from the new crop and as rain fell on dry and hot U.S. Southwest and Southeast growing regions.

The benchmark December cotton contract on ICE Futures U.S. closed down 1 cent at 66.57 cents a lb.

Cotton prices posted a 6 percent gain in August after hitting a near five-year low of 62.02 cents a lb at the start of the month.

"We have a big crop coming out. In the past, we have seen funds able to run over everybody and take the market higher, but I don't think it's going to be the case this time," said Jobe Moss, broker at MCM Inc in Lubbock, Texas.

Earlier this month, the U.S. government projected domestic production will reach a four-year high and demand in top consumer China is expected to fall dramatically due to a policy overhaul during the 2014/15 crop year that began on Aug. 1.

Moss said plentiful supply from the new crop should limit prices of the December contract to under 70 cents a lb.

Supply concerns eased further after rain was received in the dry West Texas and Georgia cotton growing regions on Thursday, Accuweather.com data showed.

Technical selling could pressure fiber, as the December contract has not broken its 50-day moving average at about 68 cents a lb since May, traders said.

The market now digests news China's state reserves sold only a fifth of the cotton offered during the 2013/14 crop year, data showed on Friday, the final day of state auctions, as poor quality and expectations of a steep decline in prices dampened demand. (Reporting by Frank Tang; Editing by Phil Berlowitz)