??Market concerns about liquidity have led to a significant 30% drop in cocoa prices.

Cocoa prices have experienced a significant drop of approximately 30% after reaching a high point last month when they were trading at around $12,000 on Futures commodities markets. The decline is attributed to concerns about market liquidity, according to Neill Barston.

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Over the past year, cocoa prices had surged, tripling in value on New York ICE and London trading platforms, causing widespread apprehension within the industry about the sustainability of the rate increase.

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Various factors contributed to the situation, including adverse weather conditions leading to a two-year shortage of supplies, crop diseases, and increased speculative trading by investors such as hedge funds, all of which drove prices upward.

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The disparity between prices in commodities markets and what cocoa farmers in Ivory Coast and Ghana were receiving was stark, with farmers initially earning less than $2,000 per tonne. However, a 50% pay increase for the upcoming crop season in both nations was announced, underscoring the significance of these countries, which together supply nearly two-thirds of the global cocoa market, to the confectionery supply chain.

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Given the circumstances, addressing farmer compensation emerged as a central focus during last month's World Cocoa Conference in Brussels. Attendees reached a consensus on the vital necessity of ensuring farmers receive a living income for the sector's sustainability.

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Alex Assanvo, the executive director of the CIGCI cocoa organization representing Ghana and Ivory Coast, underscored the urgency of resolving this issue at the event, where Confectionery Production served as the official media partner.

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He emphasized, "It's crucial for us to remain committed to our goals and the strategies devised to achieve them. We require a stable minimum price, supported by a dedicated mechanism, regardless of fluctuations in terminal market prices. History demonstrates the volatility of commodity markets, where price declines tend to be prolonged compared to increases. Thus, we must equip ourselves with the necessary tools before prices decline."

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Remarkably, within just over a week after the conference, cocoa prices plummeted from their $12,000 peak to approximately $7,500 per tonne on the New York Futures market, despite advanced cocoa sales. This decline occurred despite market forecasts indicating further crop supply deficits for the third consecutive year, leading to widespread industry predictions of continued price hikes throughout 2024.

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In a surprising turn of events, attributed to liquidity concerns within the industry, cocoa prices have plummeted steeply, adding further uncertainty to the sector. Reports from outlets like Reuters highlight this development, which exacerbates the challenges faced by farmers.

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These challenges encompass a range of issues, including adverse weather conditions associated with climate change, outbreaks of crop diseases, and difficulties accessing fertilizers, which have seen steep price increases in recent years. Additionally, illegal 'galamsey' gold mining activities in Ghana and the surrounding region have further pressured land resources, leading to notable declines in productivity.

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Local reports indicate that Ivory Coast's mid-crop harvest, expected this summer, is projected to decline significantly from 550,000 tonnes last year to approximately 400-450,000 tonnes. This decline adds to concerns within the broader supply chain, compounding the challenges faced by cocoa producers.

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