* Multi-year Texas drought stokes worries over US crop damage
* Open interest soars as prices hit March highs -ICE data
* US 14/15 inventories to climb as China cuts imports -poll
NEW YORK, May 5 (Reuters) - Cotton futures crawled higher on Monday, as dry skies over key growing regions of Texas, the top-producing state in the United States, stoked worries over potential crop damage as farmers sow acres in the world's exporter.
The most-active July cotton contract on ICE Futures U.S. edged up 0.43 cent, or 0.5 percent, to settle at 94.75 cents a lb.
A multi-year drought continues to plague Texas, after having slashed crops and shot prices to historic highs in 2011. Forecasts of dry weather this week in the western part of the state kept cotton prices supported throughout the session.
Worries over U.S. supplies have lifted prices to high levels even as global supplies balloon and traders brace for an overhaul of a government stockpiling program in China, expected to reduce import demand in the world's top consumer.
The second-month climbed to 95.10 cents a lb, the strongest level since March's two-year highs around 97 cents, last week.
Open interest rose to 189,610 contracts on Friday, the most recent ICE data showed on Monday. That was up more than 17,000 lots from the previous week to the highest level since November 2013.
The increase in open interest alongside rising prices was seen as evidence that speculator buying has continued after noncommercial boosted their bullish bet in cotton contracts in the reporting period ended April 29, weekly U.S. government data showed on Friday.
A Reuters survey showed that traders expect U.S. inventories to increase by the end of the 2014/15 crop year that runs through July 2015 as U.S. farmers boost output.
Even so, protracted dry conditions in Texas have many left many uncertain over the extent of that increase.
"These drought conditions in Texas are outweighing improved conditions elsewhere and the export demand worries," said Jack Scoville, a vice president for Price Futures Group in Chicago.
China, the world's top textile market, is expected to import one-third less cotton next season on the back of a government policy overhaul, according to the median estimate of respondents.
Exchange inventories rose to over 334,600 bales on Friday, the most recent ICE data showed. That was up from about 330,000 bales previously to the highest level since late July. (Reporting by Chris Prentice; Editing by Marguerita Choy)