CannTrends

Hemp Industry Insights & Analysis

CannTrends: CBD Biomass & Distillate Prices may have Peaked before Harvest 

The Hemp Industry has seen phenomenal growth since the FDA's approval of the Farm Bill in 2018. An influx in online CBD retail presence and an explosion in public interest in CBD has resulted in a significant increase in consumer demand.

With no intention of slowing down, this industry is projected to grow by nearly $2 billion by 2022. The chart below illustrates the skyrocketing interest in CBD among general consumers. As other hemp-derived cannabinoids, such as CBG and CBN rise in popularity and awareness, hemp will continue to drive clicks, interest, and development.

"Since 2017 Google Searches for "CBD" have more than quadrupled"

CBD Google Search Popularity

Investors and entrepreneurs alike have tasted success in their enterprises and investments, allowing the industry to expand in many directions, with diverse opportunities present throughout the Hemp community.

We have seen business development across the spectrum. Farmers, Hemp-processors, distributors, brands, and other businesses have sprouted up all over, looking for an opportunity and angle to take part in this movement. However, many have learned the hard way that operating a hemp business is not easy.

Like many emerging markets, early entrepreneurs have dealt with a fractured, immature marketplace, difficulties in locking down supply, and a hard time reaching the right customers. Brokers have been able to capitalize on a lack of transparency, sometimes leading to wasted time and resources. Because of the unevenness of the market, businesses have dealt with both surplus and scarcity of bulk raw material hemp products. 

Additionally, in 2019, hemp farmers faced significant challenges harvesting, drying, and properly storing their crops to keep them viable for sale. During and after harvest, significant crop loss occurred. Many growers cut down plants by hand, hung hemp in barns, and used hand-built band dryers. Improperly stored biomass was lost to mold as verified buyers could not be found. 

Standardized processes tailored to drying and storing hemp biomass (to preserve cannabinoid concentrations) would help hemp growers, especially during times when the market is flooded with surplus products.

2020 has ushered in new economic challenges created by the Covid-19 health crisis. Coupled with the lousy weather that hurt 2019's crop, overall market health has added to the worries about deteriorating prices and brought about general uncertainty.

Hemp Plant & CBD Molecule


Market Analysis & Metrics: Hemp Biomass and CBD Distillate Prices

It’s crucial for hemp businesses to understand the trends within the industry. Where will there be demand? Where will there be a surplus? What bottlenecks will exist in the industry and marketplace? Where are prices today, and where are they headed tomorrow? 

At CannTrade, we feel it is necessary to share our data, insights, and analysis based on metrics captured by our platform. As a hemp supplier, processor, or consumer, understanding these trends will give you actionable data to plan for the future.

Price Trend Methodology:  

The metrics supplied herein are based on average pricing data for each product category within the CannTrade platform. This means that both high and low-end goods in each category are represented, creating an accurate average. 

Our pricing assessment began in May 2020, when transactional volume within the hemp marketplace reached a level where reliable data could be gleaned. 

This week’s CannTrends report, powered by CannTrade, focuses on Hemp/CBD raw materials and the current status of pricing in the market (prior to the 2020 harvest season).  

The following chart illustrates the decline in hemp biomass price-per-pound from May through August this year.

Hemp Biomass Pricing Metrics

  • In May 2020, CBD Biomass priced at $23 per pound.  
  • By June, the price had dropped by 6.5% to $21.50 per pound.
  • In August, the price had dropped further to $17.50 per pound, an overall 23.9% drop from May.
  • September has seen a continued drop in price

We expect this trend to continue, forecasting a steady decline in price moving toward December and into the new year. The primary driver for the continued projected price decline in hemp biomass is that the 2020 harvest season is upon us. As the market is flooded with surplus products, prices will edge lower.

The following chart shows wholesale pricing for hemp CBD extracts, crude, distillate, and isolate over the same months.

CBD Isolate & Crude Pricing Metrics

The prices of Crude, Distillate & Isolate should correlate with the cost of hemp biomass over a longer timeframe (and eventually will), but these concentrates actually increased in price over the past four months.  

Prices trended positively with an overall increase of 22.6 % from May to August 2020. Looking into September and beyond, however, it is likely that the prices will begin to decrease through December 2020, potentially bottoming out in January and February 2021.  

CBD Distillate Pricing Metrics

Finishing Insight

Following the metrics and the trends seen here, the slight downward direction of pricing movement in the short to medium term is likely to continue. 

CBD processors and brands will be able to capitalize on the decline in biomass and concentrate prices for the remainder of 2020, but we can expect prices to start rebounding a few months into 2021. 

 

If you're interested in pursuing this topic, feel free to check out these links articles about hemp biomass & concentrate trends and draw your own conclusions!

4 Challenges—and Opportunities—for the CBD Industry in 2020

July 2020 Hemp Spot Price Index Report

CBD Hemp Biomass Price Trends 2019

HEMP & CBD MARKET VALUE: JANUARY 2020 PRICE TRENDS FOR CRUDE, FLOWER BIOMASS, ISOLATE

CBD Oil Market Outlook 2020: Market Trends, Segmentation, consumption by Regional data, Market Growth and Competitive Landscape

WHOLESALE HEMP PRICES:A LOOK AT 2020 AND BEYOND