The Strategy Session
From the Trading Desk at Stipelis
The Strategy Session-Futures, Sectors and Tactical Market Insights.
Wednesday, February 18, 2026
Let’s talk about cocoa.
A year ago, this market felt untouchable. Prices exploded toward 11,000. Everyone was talking about shortages, bad weather, disease, and aging trees. It felt like there was never going to be enough cocoa again.
Today, we are trading around 3,332.
That is not a pullback. That is a full reset.
The big shift started with demand. Cocoa simply got too expensive. Chocolate makers could not keep passing higher costs to consumers. At some point, buyers said enough. Grindings dropped across Europe, Asia, and North America in 2025. That is the cleanest signal you can get. When the people who use the product start buying less, prices struggle.
At the same time, supply stopped getting worse and started getting better. Weather improved in Ivory Coast and Ghana. Mid crop harvests strengthened. Farmers who enjoyed record high prices in 2024 and 2025 reinvested. New plantings in places like Ecuador are coming online. The fear that production was collapsing has faded.
Then the numbers flipped. The market moved from shortage to surplus. Estimates now show a meaningful surplus for 2025 to 2026. When you go from not enough to more than enough, prices do not drift lower. They fall hard.
Inventories are rebuilding. That matters more than people realize. Low inventories create panic. Rising inventories remove that panic. The market does not need to price in disaster anymore.
Now let’s look at what price is actually doing.
We are sitting near 3,332. That is right on the lower band of recent trading and only a few points above the 52 week low at 3,447. Momentum is deeply stretched. The reading on relative strength is near 20. That tells you selling has been intense.
But here is the key. Oversold does not mean bottom.
Volume yesterday was 40 percent above the recent average. That tells you this is not quiet selling. It is active. It is aggressive. Open interest is steady, which suggests positions are still in the market. This is not a vacuum move. It is pressure.
Price is below the daily pivot around 3,526 and below the weekly pivot near 3,793. That keeps control with sellers. The first real ceiling sits around 3,605. Above that, you would start talking about stabilization. Until then, rallies are suspect.
Support sits around 3,307 and then 3,167. If 3,300 gives way cleanly, the market likely tests that lower band again. And remember, the monthly support is near 3,305. We are right on it. That is not random.
Step back even further. The 50 day average is above 5,100. The 200 day is above 7,000. That tells you how far we have fallen and how strong the longer trend down still is. The market is nowhere near reclaiming those levels.
So what is the strategy for Wednesday?
First, respect the direction. The weight of the evidence still points lower. Fundamentals are not improving for bulls. Demand is soft. Supply is better. Inventories are rising.
Second, do not chase weakness blindly. The market is stretched. Sharp countertrend bounces can happen when momentum gets this extreme. If we see a bounce toward 3,500 to 3,600, that area becomes important. That is where sellers may reappear.
Third, watch volume closely. If we break below 3,300 on strong volume, that confirms continued liquidation. If volume dries up on new lows, that could signal exhaustion.
The bigger picture is simple. The panic is over. The story of endless shortage is gone. The market is repricing cocoa to a world where supply is improving and demand is cautious.
Until one of those changes in a real way, the path of least resistance remains down.
the Trading Desk at Stipelis
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