WALSH PURE SPREADER
Pure Hedge Division
RICH MORAN 9/23/2026
DEC-MAR COTTON #2 SPREAD (CTZ26-CTH27)
From January of 2025 until February of 2026 MAR Cotton #2 (CTH27) was stuck in a range between $68 – $70. The Cotton market was stagnant with extremely low volatility. In March and April things started to pick up for Cotton and CTH27 traded up to $88.60 on 5/13/26. Since then, it got as low as $76.43 on 6/11/26 and as high as $95.59 on 8/31/26. Today CTH27 settled $85.65.
Not surprisingly, the DEC-MAR Cotton #2 Spread (CTZ26-CTH27) also had a similar stagnant, low volatility period alongside the outright Cotton market. From mid-November of 2025 until late April of 2026 this spread floated around between -$1.10 and -60 cents.
As volatility was picking up in the Cotton market and MAR Cotton reached that price of $88.60 on 5/13/26, CTZ26-CTH27 started its current four-month slide from around -65 cents straight down to today’s settlement of -$2.76. Please see the chart above. During these four months, this spread only settled above both the 14-day and 21-day moving averages once on 7/21/26.
I do not think we want to jump in front of the sled coming down that hill. As the old saying goes, “The trend is your friend …. until the end”. I would prefer to try jumping onto the sled and hope the ride continues. So, I am going to suggest joining the trend by trying to sell this spread with a very short stop and a 3 to 1 reward to risk ratio.
When the Cotton market opens this evening, try to sell the DEC-MAR Cotton #2 Spread (CTZ26-CTH27) at -2.55. That is 21 cents above today’s settlement. If you are not filled on the opening, leave a resting (GTC) offer in at that price. If you get filled at -2.55, I would stop yourself out, with a very short stop at -2.30. This is just above the 14-day and 21-day moving averages. Otherwise, if we are correct, and the spread continues to go down, try to pay -3.30.
So, if you are able to sell CTZ26-CTH27 at -2.55: Risk .25 (price of -2.30) or $125 Per Spread, to make .75 (price of -3.30) or $375 Per Spread, plus fees and commissions.
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Rich Moran
Senior Commodities Broker
Direct: (312)985-0298
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
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