After what seems like forever, PanXchange’s Benchmarks & Analysis finally reports an uptick in May prices for CBD biomass as well as a wide variety of refined products. Non-CBD hemp prices are also flashing green now.
Field-planting of hemp is underway now for a crop that will begin to be harvested later this summer and fall. In the meantime, refiners and processors are bleeding down inventories from last year’s (and 2019’s?) harvests. PanXchange has been reporting for months that its sources say a lot of semi- and unprocessed hemp was held back off the market – maybe not an unreasonable thing for a farmer to do in the face of falling prices.
Last summer, prices for hemp and refined products continued the decline that started in October 2019. This is the first reversal of an 18-month trend.
Rising prices and the prospects for a whole new harvest coming onto market should lure remaining hemp out of storage. But if a lot of hemp and distillates does come onto market this summer, that will nip this very minor rally in the bud.
CBD and other compounds
While there are any number of factors that could push CBD-hemp prices back down, the biggest worry is that farmers will expand the number of acres planted in CBD-hemp this year. For the immediate future, though, hemp pricing will be driven by demand-side factors.
Demand for CBD could prove to be fragile. Since the 2018 Farm Act legalized hemp and trafficking in cannabinoids like CBD, it still lurks on the edges of acceptance in mainstream commerce. CBD has no more been demonstrated to be therapeutic today than when it started being bruited as a miracle drug in 2014. Today, it has still only been proven to be effective against rare, severe seizure disorders.
The U.S. Food and Drug Administration, along with the CBD industry, remains confused about if and how CBD production, sale and use should be regulated. Four months in, the Biden Administration has not nominated a permanent commissioner for the department. A clear policy direction for CBD and other cannabinoids probably needs to wait for top level policy making from someone with the clout that comes from Senate approval.
Demand for the compound delta-8 has helped fuel demand for CBD the past few months, although that phenomenon looks like it will be winding down. “Delta-8” is a shortening of “delta-8 tetrahydrocannabinol,” a cannabis compound which has psychoactive effects that are milder and different from those attributed to delta-9 THC. Delta-8 occurs naturally in cannabis plants but in such small amounts that, as a commercial proposition, it is often derived from distilled CBD.
Fourteen states, mostly without legalized recreational marijuana, have already taken steps to close what looks like a loophole in the Farm Act’s legalization of all non-delta-9-THC compounds. Seven other states, including recreational marijuana states Illinois and California, are taking steps to regulate its sale within their borders.
The U.S. Drug Enforcement Agency says that, by being manufactured from CBD, commercially available delta-8 does not enjoy the legal exemption provided to cannabinoids. The agency included delta-8 in “guidance” beginning on May 10. When the government offers “guidance,” you know in which direction things will be heading.
Delta-8 is reputed to have some uniquely attractive effects, especially milder euphoria unaccompanied by anxiety. Like all of the cannabinoids, delta-8 would benefit from serious research into its pharmacology.
Fiber, feed and food
There is no short-term fix for persistent weak demand for other types of hemp to boost prices this year. The hemp fiber industry is constrained by a general lack of infrastructure that extends from suitable harvesting equipment through all stages of processing.
At the end of the processing chain, there are manufacturers who are interested in working with hemp. Patagonia has been using hemp for years.
German sporting goods manufacturer Adidas joined with New Zealand/American sustainable clothing producer Allbirds to debut a new line of sport shoes, the FUTURECRAFT.FOOTPRINT on May 10. The shoes are made out of hemp. According to the companies, each year more than 24 billion pairs of shoes are manufactured worldwide and 20 billion pairs of used shoes end up in landfills. Making these shoes reportedly entails much less carbon emission than other shoes. Also, most parts of the shoes can be composted.
Hemp as a major animal feed ingredient will not be a reality until government, university and medical research into its effects has progressed considerably. Agriculture departments around the country are studying the outcomes from including hemp as silage, feed meal or raw seeds on meat, dairy and egg production. The medical end of research is which, if any, cannabinoids make it into the final products that may be consumed by humans.
Perhaps ironically, hemp itself is widely available as a human food ingredient, no testing necessary. On its own, in one man’s opinion, it is pretty unpalatable, although its high, full spectrum protein content and omega-3 fatty acids make it an appealing addition in health foods.
Photo by Kimzy Nanney on Unsplash