Forefront Communications

Bloomberg: Hemp Prices Plunge As CBD Demand Falls Short: Cannabis Weekly

Forefront Communications

Forefront Communications

It may not be apparent when you’re spending $70 on CBD foot cream, but hemp prices are plunging amid a “grossly oversupplied” market, according to the head of the industry’s first price provider.

Hemp biomass prices reached a high of over $40 a pound in July, just before the 2019 harvest came in, according to PanXchange Chief Executive Officer Julie Lerner. Today, it’s trading under $10 a pound following a quadrupling of supply from 2018 to 2019.

Meanwhile, the CBD consumer market remains limited as the U.S. Food and Drug Administration continues to prohibit the extract in food or dietary supplements, although many sellers ignore that mandate. CBD is legal in other uses, such as topicals, as long as it contains less than 0.3% THC, the cannabis compound that gets you high.

“Every way you slice it, the physical demand for the CBD market is much, much smaller” then the supply, Lerner said in an interview. “I’m a little surprised that retail prices have not started to come down yet. There’s so much competition.”

Lerner, a former Cargill trader, founded PanXchange in 2011. It started as a trading platform and benchmark pricing service for commodities in East Africa, then expanded into the U.S. via the specialty sand market for oil and gas. PanXchange launched the hemp industry’s first suite of benchmark prices in January 2019, one month after the U.S. farm bill legalized the plant, and added a trading platform in August.

Today, the hemp market is “rife with desperate sellers and opportunist buyers,” Lerner said in her December analysis of the industry. She looked at three different measures of potential CBD demand and found in each case that farmers are growing far more hemp than the industry needs.

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