* Cotton surges to highest level since May 2012

* Prices climb ahead of USDA monthly crop report

* Market seen as overbought since end of January

By Chris Prentice

NEW YORK, March 4 (Reuters) - Cotton climbed for a fifth straight session to a fresh nine-month high on Monday, amid expectations of a bullish U.S. government forecast on Friday and continued strong demand from China, the world's largest consumer.

The most-active May cotton contract on ICE Futures U.S. gained 0.86 cent, or 1 percent, to settle at 86.26 cents per pound.

Earlier in the session, cotton spiked as high as 86.75 cents a pound, eclipsing recent rallies to levels above 85 cents. Monday's high marked the highest level since early May 2012.

The gains came ahead of the U.S. Department of Agriculture's monthly report, set for Friday, as bullish sentiment mounted on expectation of strong demand from China even in the face of forecasts of a record global surplus.

"People are expecting some modestly bullish revisions to the U.S. figures," said Chris Kramedjian, a risk management consultant for INTL FCStone.

Last month, cotton gained after the USDA increased the forecast for China's ending stocks, estimating that the country will hold more than half of the world's inventories by the end of the crop year in July. That increase in China's inventories coincided with an increased forecast for U.S. exports during the 2012/13 crop year.

Export sales to China have been seen as solid, and last week helped drive a daily spike to 85.91 cents a lb.

In addition to expectations of strong demand, concerns have been building over the size of next year's cotton crop.

"We're going to lose acreage to other crops next year, making people inclined to secure supplies," said Sterling Smith, a futures specialist with Citigroup.

Initial forecasts from the USDA anticipate a 19 percent reduction in acreage for the 2013/14 crop from the previous year's, as cotton loses ground to more lucrative crops like corn and soybeans.

Fiber has surged more than 13 percent since the start of the year. The rally has come as speculators' bullish bets on cotton futures and options reached the highest levels since September 2010.

Noncommercial dealers unwound their bullish stance for the first time in six weeks during the week to Feb. 26, that position has helped support buying.

The second-month contract has remained in overbought territory, with a relative strength index of above 80, since the end of January.

Certified stocks climbed to the highest levels since June 2010, reaching more than 421,000 480-lb bales on Friday, according to ICE data. Another nearly 11,000 bales awaited review by the USDA on Monday. (Editing by Diane Craft)