NEW YORK Dec 31 (Reuters) - Benchmark cotton prices on ICE Futures U.S. settled down 0.69 cent, or 1 percent, at 63.28 cents per lb on Thursday, but the second-month contract ended the year up 5 percent.

The slight gain came as benchmark prices recovered from a 6-1/2-year low struck early in the year on weak demand, competition from synthetic fibers, and huge supplies.

World inventories have swelled due to a government stockpiling program that lifted prices and kept farmers planting even as demand flagged.

U.S. farmers this year planted the fewest cotton acres in over 30 years as weak prices drove them to other crops like soybeans and corn.

Poor harvest weather in the fall helped support prices toward the end of the year, with rains across the U.S. cotton belt damaging quality.

(Reporting by Chris Prentice; Editing by Richard Chang)