Don't expect a lot of celebrating this year for National Hemp Day on February 4.
Prices continue to fall. The January report from Hemp Benchmarks has shown a glut of biomass on the market that has led to farmers being unable to sell their hemp crops.
The report, prepared by Jonathan Rubin, the founder of Cannabis Benchmarks and Hemp Benchmarks, covers the wholesale prices of hemp in almost nine states. Eight states provided data on planted acreage and six of a possible nine states provided planting information.
The timing of this report is critical as this is when farmers are assessing the lessons learned from 2019 and making decisions for 2020.
It seems CBD seed and clone stock is falling ahead of the planting season. "One reason seems to be that most high-CBD varieties could conceivably result in a "hot" crop; reputable seed sellers are being cautious and generally not guaranteeing their genetics will definitely be compliant under the USDA's IFR," read the report. One seed producer told Hemp Benchmarks that the nature of the beast for high CBD genetics is that the plant can go "hot," essentially producing too much THC.
Another reason for the falling prices is that hemp seed producers can increase production dramatically. One breeder said he could increase production from two million seeds to 100 million in one year.
There also seems to be a shift toward high-CBG varieties, shown to have smaller THC levels. While there has been an uptick in prices for CBD Clones, and seeds in January, the overall price trend remains lowers than in the fall.
The rarity of CBG has caused that product to generate high prices, but the demand for CBG is hard to determine. There hasn't been as much written or determined about the benefits of CBG over CBD.
Production Issues
Bonny Jo Peterson, executive director of the Industrial Hemp Association of Washington, also reported that nearly every hemp farm in her state had issues with their current equipment, including binding or breaking down, due to the fibrous and sticky nature of the plant.
"People used a combination of everything from bean and corn harvester combines to chippers to hand harvesting," Peterson told Hemp Benchmarks. "So every single issue you can imagine with harvesting and harvesting equipment happened."
Another obstacle to a successful harvest in 2019, said Peterson, was not having proper post-harvest drying spaces and equipment. "People didn't put in the cost of the 'R-and-D' needed for the air and heat driers for hemp," she said, "or the space to properly hangdry. Not everyone found the space needed, not everything turned out well."
Peterson estimated that nearly every farmer in her state lost at least a quarter of their crop during the 2019 season due to improper drying practices or the lack of a proper post-harvest drying plan.
CBD Market Will Continue to Grow
Nielsen predicts that the U.S. hemp CBD market could reach between $2.25 billion and $2.75 billion in 2020. Yet, many of the price contributors to the Hemp Benchmark report said that sales of extracts had been sluggish.
"Very few spot cash purchases are being made and inventories held by producers and processors who are taking splits or tolling fees are growing," read the report. The report stated that CBD Isolate and Distillate Full Spectrum prices fell by 27% month over month. The best performer was Distillate Broad Spectrum, which only fell 7%.
One processor said the companies weren't making any money and so the processors weren't getting paid and that was hitting the farmers as well.
Green Lining
While the report seemed all gloom and doom, there were pockets of positivity. Certified organic biomass was performing the best and these farmers suggested they would team up with certified organic extractors to produce crude and refined CBD oil. They hope to ask for higher prices for these extracts.
The report also noted it was hearing good things on the terpene front. With the federal ban on flavored nicotine, there is a surge of interest in high terpene items with aromatic compounds. The biggest buyers of these products are vape cartridge manufacturers.
Additional good news is that the USDA Risk Management Agency announced a new crop insurance program starting this year. It will apply to certain counties in 21 states. The EPA also approved of 10 pesticides for use on industrial hemp.
The USDA also approved the first set of plans submitted by Louisiana, New Jersey and Ohio in December and in January approved of plans for Delaware, Nebraska and Texas.
Tribal hemp plans were approved for Flandeau Santee Sioux, Santa Rosa Cahuilla, La Jolla Band of Luiseno, Colorado River Tribes, Fort Belknap, Iowa Tribe of Kansas and Nebraska and the Yurok Tribe. Ten more tribes are under review.
Colorado continues to be the biggest hemp producer with 52,275 acres planted in 2019 followed by Kentucky in second place with 26,000 acres planted. Minnesota was third place with 7,278 acres planted.
