The Global Pricing of Hemp
The global hemp market is diverse. There are still large differences between the prices of hemp from region to region. In addition, the hemp industry is set to grow globally, especially in emerging markets.
Demand for Hemp
Demand for hemp is rising, particularly for hemp oil. Hemp oil paints, printing inks, biofuels, solvents, and more are all contributing to an increased demand for hemp. Research and medical applications for hemp are expected to further increase demand globally.
The fast-growing hemp industry is also expected to grow thanks to increased investment. Growth in investment in the hemp industry is directly leading to more farmland being acquired and increased cultivation.
The speed of the hemp industry’s growth, alongside other factors, has created a wide price range for hemp seeds and cultivated hemp.
Hemp in Europe
Currently, very little official data exists for hemp and other CBD markets in the EU. At Canxchange, we introduced our quarterly Benchmark Reports to address this important area of need. Furthermore, regulations within different EU countries regarding hemp vary. Then there are countries such as Switzerland, which allows hemp cultivation of plants with under 1% THC content. However, other countries such as Austria and Spain with more confusing laws, which have been cracking down on unapproved cannabis. Enforcement by country varies as well, which has led to a more slowly developing hemp industry in Europe.
There are plenty of different merchants selling hemp high in CBD but with THC content well under 1%. While prices vary, Prohibition Partners found that on average, hemp stalks (fiber) brought in EUR 200 per ton and hemp seeds brought in EUR 1,200 per ton.
When searching the entire European market, it’s normal to find individual feminised seeds going for EUR 0.90 each. Hemp flower can cost between EUR 250 and EUR 300 per kilogram. When unlisted information is taken into account, prices can vary more radically.
What Can We Expect Going Forward?
Europe’s hemp industry has gotten caught in the middle of several significant disputes. The European Industrial Hemp Association has alleged that some companies in Big Pharma are trying to restrict accessibility to CBD products.
In addition to disputes between industrial powerhouses, there is legal controversy over how to categorise CBD plants, including hemp.
Going forward, market demand clearly favours hemp. However, hemp availability and pricing in Europe rests with the forces debating cannabis licensing and distribution.
Hemp in the US
Hemp prices in the US have dropped substantially since the legalisation of the crop. Cultivated hemp can now be bought for under $2.50 per pound. Back in 2018 just before legalisation, one pound cost $40 to $45.
Seeds for industrial hemp, however, have gone up. Year-over-year, industrial hemp seeds have increased by 22%. When planting season is getting started, hemp seed prices increase.
Hemp prices have gone through some changes in 2021. Hemp still sells for around the same price per pound, but the market has yet to mature and stabilise. Changes in consumer demands have been constant and hemp has emerged as a speciality product. While hemp has many uses, many of the businesses exploring those uses are still in the startup phase and the broader market remains relatively unexplored.
Despite the uncertainty, US hemp prices have remained stable compared to other regions.
Hemp in China
In Asia, the hemp market is most active in China, where one-third of the world’s hemp is grown. China is also the largest exporter of both raw and processed hemp to the US.
In China, the hemp industry is highly regulated, but there is more clarity surrounding those regulations. Clear regulations, long-established fibre spinning facilities, and lower labour costs contribute to lower prices.
Bulk purchases of Chinese hemp are relatively inexpensive. Hemp prices vary around the same ranges as US hemp, but China’s market share in the hemp industry keeps them competitive.
How Exchanges and Global Trade Will Force This to Change if Suppliers Want to be Competitive
The trend in hemp prices is, unfortunately, that prices remain unclear. There are commonly understood ranges of the accepted value of:
- Hemp seeds (of all kinds)
- Cultivated hemp by the pound, kilogram, or ton
- Hemp’s per-acre value
- Various manufactured hemp products
Despite the growing market size and vast utility that hemp offers, it lacks the indexes that many other commodities have. The Bloomberg Commodity Index, S&P GSCI Index, and DBIQ Optimum Yield Diversified Commodity Index are standard for investors in commodities. However, hemp isn’t included.
There is a US Marijuana Index that tracks leading cannabis and hemp stocks. However, it’s a relatively incomplete index. Globally, there is no consensus on the value of hemp or any other cannabis crop. This has a few implications:
- Hemp cannot become as competitive as other commodities
- There is no consensus on global hemp prices, so prices can vary wildly
- Hemp suppliers cannot compete globally as other commodity suppliers do
The Value of Pricing Indexes
Canxchange recently introduced the Canxchange Farmers Sentiment Index, however other than there are zero to no other indexes matching those commodities indexes listed above. After all, it’s now more than possible to compile industry data and create a reliable pricing index. You don’t need to be the S&P to do so, especially for a small range of commodities.
Canxchange has a value pricing index for the hemp industry. The index and the reports produced using it encourage transparency and efficiency in the whole cannabis market. This effort produces confidence in the industry. At the same time, hemp cultivators, producers, manufacturers, and investors have the insights they need to more confidently make the decisions that count.
The development of value pricing indexes for hemp is a profound step in the standardisation of the industry globally.