A global gut of hemp is leading to producer price wars and which have seen CBD prices tumble by over a half in the last 12 months.
Market analysts put the surge in hemp growing down to the rush to plant by U.S. farmers following the introduction of the 2018 Farm Bill. And, with the hemp harvest underway, there is speculation the prices will fall further in the coming weeks and months, reports Hemp Today. Wholesale trading platform Kush.com entered the hemp space following the passage of the Farm Bill and collates data from its exchanges.
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CBD Isolate Price Plummets
Looking at the hemp extraction market, it says CBD isolate prices have fallen from a high of $9,470 per kg in October 2018 to $4,133 per kg in August 2019. In a second report on the HempGrower website it reports findings by U.S. analysts’ Hemp Benchmarks that land set aside for hemp cultivation has risen by 500% in the last year.
“It says there are more than 400,000 acres of licensed hemp cultivation land in the U.S. Not all of that is likely to have been planted this year, but that’s a steep climb from the nearly 80,000 acres licensed in 2018.”
The Hemp Today website reports Chase Nobles, Co-CEO at Kush.com as saying that ‘With many businesses and farms still just expanding into the industry, the boom in growth is leading to a massive price crash in all forms of the product’.
The Crash Will Be Swift
“Derivative prices continue to drop while many farms are still holding strong on price, which will likely make the crash swift when it happens,” he added. Calculating the U.S. will produce 180 million lbs of biomass, equating to 4.7 million kg of isolate this year, Kush.com say supply could be eight times market demand.
The Pittsburgh-Post Gazette highlights the extent of the hemp growing boom in its state with more than 300 permit holders now licensed to grow the once-forbidden crop in Pennsylvania. It says some were anticipating returns of $50,000 an acre, but these estimates have been cut to less than $10,000.
Price To Fall Further
In Europe the oversupply of American hemp is having a knock-on effect. In mid-August European prices were half of those a year ago. “We’re having to adjust prices monthly because there is so much isolate out there,” one major European player said. “We have no idea where the pricing will bottom out,” reports Hemp Today
Bloomberg reports on findings from global research company Technavio that the ‘hemp market is witnessing price wars among producers and end-users owing to the oversupply of hemp in various countries’. Mr Noble went on to say that events over the last nine months are not uncommon following the sudden legalization of a market.
With demand rising, farmers are attracted by the high prices, but with too many players having entered the harvest, an oversupply will see prices crash and some players forced out.
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