March 2020 Pricing Commentary
In what has become a familiar refrain since the commencement of Hemp Benchmarks’ reporting on the U.S. market in April 2019, wholesale prices for hemp plant material and extracted products continued to trend downward for the most part in March 2020. However, for many product categories, the pace of decline slowed relative to last month. This is particularly true for CBD-rich biomass, as well as all types of seed and clone stock for which we currently assess prices. More stable prices for seeds and clones are not unexpected as growers look to secure stock from which to propagate crops in the coming months.
All CBD Distillate categories saw rates drop again in March. Relative to other forms of extracted CBD, though, THC Free Distillate has been observed to retain value better. Since October 2019, the assessed price for THC Free Distillate has fallen by 33%. By comparison, assessed prices for Broad and Full Spectrum Distillate have dropped by 44% and 54%, respectively, while that for CBD Isolate has fallen by 53% in the same span.
Similar to last month, we continue to hear reports from our Price Contributor Network that processors are discounting extracted products in order to generate cash flow and preserve liquidity. Such practices may very well continue with signs that demand for CBD may be cooling, as well as the significant contraction in aggregate consumer demand that is expected due to the COVID-19 pandemic that is currently gripping the U.S., as well as being felt around the globe.
While rates for many products exhibited more stability than in prior months, prices for CBG biomass and extracted forms of the minor cannabinoid plunged. There are major questions as to whether a sizeable market even exists for CBG currently. Farmers that might have been hoping to take advantage of recent high prices for CBG biomass and extracted products may need to adjust expectations in light of recent trends.
March 2020 Hemp Spot Price Index Report Headlines
COVID-19 Impact
Pandemic causes immediate disruption; could affect demand and production.
CBD Demand Waning?
Major hemp CBD company reports Q4 2019 sales down despite wider product availability.
Outlook for U.S. Hemp Production in 2020
Early signs suggest stable or expanding production even as some farmers exit.
Federal Regulatory Update
USDA, FDA show willingness to accommodate hemp CBD industry
Industry Developments
New bankruptcies and lawsuits hit major hemp companies in March.
Research
NCSU researchers say compliant crops with high CBD are rare.
State Updates
Illinois allows hemp into legal cannabis supply chain; South Dakota legislature approves hemp production bill.
