* Speculators lift bullish stance to highest since March -CFTC data
* Fiber prices up over 8 percent in last nine sessions
* Worry over tight U.S. supplies underpins market
NEW YORK, Aug 19 (Reuters) - Cotton futures edged down on Monday, easing back from last week's five-month high as a big increase in investor buying was seen slowing.
The most-active December cotton contract on ICE Futures U.S. edged down 0.46 cent, or 0.5 percent, to settle at 92.86 cents per lb.
The second month climbed to 93.72 cents a lb last week, the highest level since mid-March, during a speculator-driven rally that lifted prices over 8 percent in the last nine sessions.
"The specs were less reluctant to jump in again and keep building," said Sharon Johnson, a cotton specialist with KCG Futures in Atlanta.
A weekly U.S. government report issued after Friday's close showed that noncommercial dealers had lifted their net long position in cotton futures and options to the highest level since March, when front-month prices surged to a one-year high of about 94 cents per lb.
The second-month contract, now the most active, has rallied in recent sessions as open interest reached the highest levels in five months, according the most recent ICE data, amid the renewed interest from speculators.
Prices began to surge after a technical break-out on Aug. 7 turned cotton's chart bullish and a U.S. Department of Agriculture (USDA) forecast stoked fears of tight supplies in the world's top exporter.
Trading volumes were relatively light on Monday, totaling about 14,000 lots compared with a 30-day average 24,000 lots, preliminary Thomson Reuters data showed.
"Futures were quiet today. It looks like the longs were buying protection" through put options that prompted some limited long liquidation, said a U.S. broker.
Traders said that concerns over U.S. supplies continued to underpin prices, particularly after rains plagued the Southeast over the weekend.
A USDA lowered its outlook for U.S. production last week, citing reduced yields in the key growing region.
Worries over a late crop and plunging exchange stocks have pushed December prices to a premium to the March contract , with the backwardation seen as unusual for a market expecting global surpluses.
The world is forecast to hold record inventories by the end of the crop year in July, but over 60 percent of those are expected to become part of China's stocks and are considered unavailable to the global marketplace.
Beijing began building its strategic reserves in 2011, paying above global prices to support farmers.
The policy has led to voracious demand for lower-priced, foreign cotton in the world's top textile market and a sense of tightening supplies outside of China.
Merchants said that the recent run-up has slowed already quiet mill buying, leaving U.S. cotton expensive to fiber from other origins.
Cotton prices in India are expected to continue to rise this week on higher demand from millers and yarn exporters.
The world's second largest producer relaxed restrictions on exports in the current season to end-September this month, due to expectations of a bigger crop in 2013/14.
Dealers eyed U.S. weekly export data due later this week for indications of slower demand amid the higher prices. (Reporting by Chris Prentice; Editing by Chizu Nomiyama)
