As we go into the U.S. harvest season, September saw significant price depreciation in our assessed Biomass Price Benchmark, with prices falling 29% month-on-month to a low of $0.75/%CBD /pound (or $1.65/%CBD/kilo). Transactions took place between a low of $0.60/%CBD/pound and a high of $2.40/%CBD/pound.
Biomass prices have not been this low since April, and they follow the general downward trend driven by oversupply that the industry has experienced throughout 2020.
Transaction prices were down across the board and it is fully expected that with 2019 stocks still in circulation and new harvested crops already beginning to filter downstream that prices will remain suppressed for the foreseeable future.
At these price levels industrial use for biomass becomes much more attractive, and it is likely that we will start to see a greater proportion of transactions being processed for industrial purposes as we go through the final months of 2020.
Our predicted Biomass Price Benchmark price for October is $0.75/%CBD /pound (or $1.65/%CBD/kilo).
A survey of 47 states has reported total hemp production at 465,787 acres for 2020, down 9% from 2019, but the number of states allowing hemp production has expanded, and more producers are growing hemp this year. Hemp Industry Daily reported 21,496 licensed growers, up 27% from last year.
This means that the total harvest figures are likely to remain similar to 2019. We will begin to see more detailed data during October which will allow us to get a better picture of the overall U.S. harvest volumes.
With Europe, and other regions, also adding to total hemp production it looks likely that supply will again be high for 2020-21 and as a result current price levels will probably be maintained for the rest of the year.
Our CBD Isolate Price Benchmark was down slightly by 2% over the period, with assessed prices depreciating to $1,125/kilo. This continues the general downward trend for CBD Isolate during 2020. Despite some price appreciation in early June prices overall for CBD Isolate are down by 29% from January when the assessed price was $1,450/kilo.
Despite the month-on-month reductions, price depreciation of CBD Isolate has narrowed over the past 6 months and during the summer months we saw a sustained period of stabilisation. While we are likely to continue to see fluctuations in prices, linked to availability and upstream supply dynamics, this commodity does seem to have found a level of between $1,100/kilo and $1,400/kilo, which is likely to be maintained for the foreseeable future.
Transaction volumes for CBD Isolate were also down on the month suggesting that many manufacturers are holding sufficient supplies of refined raw material for their current production purposes.
Once full harvest volumes have been calculated we will have more data with which to make predictions for price movement, particularly as we go into 2021.
Our predicted CBD Isolate Price Benchmark price for October is $1,125/kilo.
Across our other refined material price benchmarks September saw some interesting fluctuations:
The Cannyx Markets CBD Distillate Benchmark rose slightly during September to an assessed price of $3,700/kilo. This was up 6% on August’s assessed price of $3,500. Transactions took place at a larger spread with trading fluctuating between a low of $2,500/kilo and a high of $4,900/kilo. This follows a period of relative stability for CBD Distillate prices. While the spread in transactions has widened in recent months, the number of transactions taking place at the higher end has helped to push prices back up.
Given the stability we have seen in this raw material class over recent months we predict that prices for September will likely remain at a similar level.
Our predicted Cannyx Markets CBD Distillate Benchmark price for October is $3,700/kilo.
Our CBD Water Soluble Isolate Benchmark saw the largest increase of our refined categories with assessed prices rising 35% in September to $2,100/kilo, up from $1,550/kilo in August. Observed transactions occurred between a low of $1,700/kilo and a high of $2,500.
This is a significant reversal of the downward price trend that we have seen for CBD Water Soluble Isolate throughout much of 2020. Previous months, have seen the commodity trade at around the $1,500/kilo level and is not clear why we have seen such an increase during September.
One factor that is likely to have impacted the current price is a rising demand for water soluble CBD ingredients. As the CBD beverage market continues to take hold, many manufacturers have introduced CBD-infused beverages during 2020 and the need for stable soluble ingredients has risen accordingly.
We will be watching this commodity closely in October to see whether this is a short-term price spike or signs of a longer-term shift to this becoming a more sought-after CBD raw material.
Our predicted CBD Water Soluble Isolate Benchmark price for October is $2,000/kilo.
Our CBD Water Soluble Broad Spectrum Benchmark also increased some 13% during September to an assessed price of $2,700/kilo, up from £2,400/kilo in August. Prices for CBD Water Soluble Broad Spectrum have risen steadily over the past 3 months and look like they may be tracking a similar trajectory to that of our CBD Water Soluble Isolate Benchmark.
We will also be watching this commodity closely to see whether the growing trend for water soluble products will push prices higher.
Our predicted CBD Water Soluble Broad Spectrum Benchmark price for October is $2,700/kilo.
Our CBG Isolate Benchmark continued to reverse the price gains observed at the start of the summer. Assessed prices fell 6% during September, to $7,500/kilo. This follows a similar price drop of 7% during August. Overall CBG Isolate prices are down 41% since March, in a trend that has seen greater availability of supply weigh heavily on prices.
Despite many manufacturers adding CBG-based products to their product ranges, it has not yet managed to capture the wider consumer interest. As demand for CBD-based products continues to grow there is no indication yet that consumers see sufficient differentiation between CBD and CBG.
This could still be reflective of the immaturity of the overall market and as more consumers try CBD products then the demand for nuanced products will become greater. This is probably still a way off and it may only be in 2021 that we start to see CBG really begin to take a share of the market.
Despite the recent fall in raw material prices for CBG Isolate, many growers are hoping that this minor-cannabinoid will help increase the value of their 2020 harvest. A recent survey of US farmers suggests that 14.5% of planted hemp, in 2020, will be destined for CBG refinement.
This means that there should be ample supply of CBG going into 2021 which could continue to push prices lower.
Our predicted CBG Isolate Benchmark price for October is $7500/kilo.
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