* Most-active December cotton down 0.8 pct, extends loss

* Front-month July cotton up 0.8 pct on mill demand

NEW YORK, June 16 (Reuters) - U.S. cotton futures' benchmark contract fell for a second straight session on Monday after weekend rains in Texas boosted the potential for what dealers said was already shaping to be a bountiful crop.

While mill buying lifted prices for the old cotton crop traded via the soon-to-expire July contract on ICE Futures U.S., the most-active December contract was bearish through the day, the dealers said.

December cotton on ICE finished down 0.63 cent, or 0.8 percent, at 77.12 cents a lb after trading between a session high of 77.95 and low of 77.00. December fell 0.1 percent on Friday.

The front-month July contract ended the latest session up 0.67 cent, or 0.8 percent, at 87.62 cents a lb.

First notice day for the July contract, which expires in about three weeks, was "rapidly approaching" and investors must soon exit "either into the new crop futures or out of the market", said Citigroup futures specialist Sterling Smith.

"The new crop December is under some pressure ... as west Texas did see some beneficial rains over the weekend," Smith wrote in a commentary.

December hit a 3-1/2 month low of 76.50 cents last week after a monthly government report forecast that U.S. cotton inventories for the upcoming season will hit a six-year high of 4.3 million 480-lb bales.

The report also forecast that world stocks of cotton will reach a record high of 102.7 million bales by the end of July 2015.

Recent rains in Texas, the main growing state for U.S. cotton, had weighed further on prices as dealers expected the additional moisture to offset some of the drought damage caused to the new crop earlier in the year.

For this week, daily temperatures in Texas's main cotton-growing region have been forecast at 90 degrees Fahrenheit and above, with potential for rain only at the weekend. (Reporting by Barani Krishnan; Editing by Peter Galloway)