* Fiber falls 5 percent over past 4 sessions
* Profit-taking after 1st qtr gains seen continuing
* USDA monthly crop report due Wednesday
NEW YORK, April 9 (Reuters) - Cotton futures fell for a fourth straight session on Tuesday as reduced mill buying and investor profit-taking damped the momentum of cotton's recent speculator-driven rally.
The most-active May cotton contract on ICE Futures U.S. fell 0.74 cent, or 0.9 percent, to settle at 84.64 cents per pound, after touching 84.38 cents a lb, the lowest level since early March.
The spot contract has slumped more than 5 percent over the past four sessions, the biggest four-day decline since late October, as investors were seen taking profits following a first-quarter rally of 18 percent and as mills held off buying into the falling market.
Cotton closed below technical support at its 50-day moving average.
The index fund roll further pressured prices.
"There's a little bit of cooling off, and some profits coming out of the May and not rolling into the July," said Sterling Smith, a futures specialist with Citigroup in Chicago.
The July cotton contract declined 0.65 cent, or 0.7 percent, to finish at 86.61 cents a lb.
Open interest fell by about 5,000 contracts on Monday, ICE data showed, as prices declined 1.6 percent, interpreted as evidence of long liquidation.
Cotton's spiked to a one-year high of 93.93 cents a lb last month as speculators boosted their bullish stance in cotton futures and options, according to Commodity Futures Trading Commission data. Noncommercial dealers have trimmed their bet from a five-year high reached last month.
Prices felt further pressure from expectations that the U.S. Department of Agriculture's monthly crop report due Wednesday would confirm a slowdown in demand, dealers said.
The physical market underpinned cotton's first-quarter gains, thanks to steady mill-buying and a sense of tightening stocks outside of China, merchants said.
Last month, prices rose after the USDA revised upward its forecast for global consumption, citing recent sale and shipment levels.
The world is projected to hold a record cotton surplus by the end of the crop year through July, though more than half of that is expected to become part of China's stocks and is considered unavailable to the global marketplace.
Beijing began building its reserves in 2011, buying above global prices to support farmers.
The world's largest consumer is expected to hold enough cotton in its stocks by the end of July to feed demand for more than a year.
Prior to the recent rally, cotton posted two years of declining prices as lower-priced, synthetic alternatives eroded demand for the natural fiber and global surpluses grew. (Reporting by Chris Prentice; editing by Jim Marshall)