Hemp Biomass Prices Dip as 2021 Harvest Adds Supply, But Emerging Demand Seen

For September hemp column
Suzanne Cosgrove

Suzanne Cosgrove

Editor

Mid-range prices of hemp biomass were bobbing in a sea of red in the September PanXchange Hemp: Benchmark & Analysis report, but the exchange said it was standing by its forecast that prices for “quality 2021” biomass will rally after the current harvest.

Most growers and processors are knee-deep in harvest right now, and early indications are that yields are better than anticipated. Expectations for that 2021 supply and an existing hemp backlog are fueling the current downward trajectory for biomass prices. Another unknown is when stored supplies will flow into the market, the exchange said.

So where is demand coming from? As also noted in the August hemp report, demand for industrial hemp is strong, especially for non-cannabinoid hemp hurd used in animal bedding and building materials like hempcrete, and supply is relatively limited in that segment of the market.

According to PanXchange’s analysis, USDA’s Farm Service Agency data shows that only 10,747 acres were planted with hemp fiber and grain, compared with 17,177 acres in 2020. Allowing for some acreage underreporting and assuming a 6.9 and 3.3 ton per acre yield, just 51,365 tons of total hemp stalk are expected to be available for processing, they said.

“The risk for scarcity seems to mainly be for hurd,” as its applications have been developing rapidly, the report stated. Demand has already spurred imports of hemp hurd to be used for bedding and hempcrete. The risk of a shortage of fiber also is a factor, but PanXchange notes that after several years of contending with too much supply, a jump in demand in this sector of the hemp market seems like a good problem to have.

Hemp in animal feed: Issue gains traction, but sees little federal action

The long-running debate over adding hemp to animal feed — something that could add to the mix of potential demand — grew a bit more urgent in September as the drought in the U.S. West  elevated prices for traditional feed like alfalfa and left producers searching for possible alternatives, the PanXchange report noted. The American Association of Feed Control Officials, a group of animal food regulators, put out a position paper on the issue of hemp in feed last month that urged the Food and Drug Administration to review it on a national level. 

The AAFCO paper noted the emergence of animal food with hemp byproducts in the marketplace following the passage of the 2018 U.S. Farm Bill, and it urged agricultural leaders, lawmakers and industry members “to consider the potential adverse impact of allowing hemp in animal food prior to completing the necessary research and legal approval process that will demonstrate the safety and efficacy of this ingredient.”

In the paper, the association not only advocated for added federal research on the impact of hemp on the health of livestock and pets, but also for the safety of human food derived from food-producing animals. “While research is currently underway, there has yet to be a definitive scientific understanding of the transfer rate of THC, CBD, and other cannabinoids into meat, milk, and eggs,” the paper added.

Delta-8 debate continues to percolate

Meanwhile, demand for delta-8 flower is reportedly helping the hemp industry work through its supply overhang. As JLN reported last March, the hemp flower has large concentrations of non-psychotropic CBD, but the demand for the smokable hemp flower is mostly associated with the practice of coating it with delta-8 THC, the ingredient that gives users a mild high.

The FDA has sprung into action on that score. Last month it published  “5 Things to Know about Delta-8 Tetrahydrocannabinol – Delta-8 THC,” warning consumers that it had “serious health risks” and that “delta-8 THC products have not been evaluated or approved by the FDA for safe use in any context.“

 Photo of drying hemp by George Place, N.C. extension director.

 

John Lothian Newsletter

Today’s Newsletter

SEC GameStop Report Debunks Conspiracies, Backs Gensler Plan

SEC GameStop Report Debunks Conspiracies, Backs Gensler Plan

First Read $53,806/$300,000 (17.9%) ++++ FIA Tech's Atlantis Ready for More Options Brokers John Lothian - John Lothian News Give-up Settlement and Payment System Improves Efficiency, Speeds up Payments FIA Tech is trying to solve a problem for options brokers with a...

We visit more than 100 websites daily for financial news (Would YOU do that?)

Now Read This

Kenny Polcari – Open Outcry Traders History Project Part One

Kenny Polcari – Open Outcry Traders History Project Part One

When he was young, Kenny Polcari wanted to be in politics – preferably to eventually be president of the United States. But, he said, “Thank God none of that came true.”

When he was 19, he interned on the floor of the New York Stock Exchange. He knew nothing about the business and was from Boston rather than New York. At first he thought, “Who wants to move to New York City in the summer as a 19 year old kid?”  He was going to go back to Cape Cod and be a lifeguard.  But he thought about it and did his homework and said, “What’s the worst that can happen?” 

FIA Tech’s Atlantis Ready for More Options Brokers

FIA Tech’s Atlantis Ready for More Options Brokers

FIA Tech is trying to solve a problem for options brokers with a solution that’s worked for futures brokers and exchange-traded derivatives. That problem is improving the efficiency of give-ups and take-ins reconciliation, settlement and payments.

In July, FIA Tech announced the expansion of its Atlantis service to help options brokers settle give-up trades faster and get paid sooner, while freeing up human resources thrown at this complex problem. One hundred million contracts a month are processed via Atlantis, which is expanding into options in a two-part process.

Pin It on Pinterest

Share This Story