Harvest has begun throughout the country and will be ramping up over the next few weeks. Unfortunately, there is still a lack of data to truly predict the amount of commercially viable hemp that will be available for processing in 2020. On September 12th, the USDA Farm Statistics Agency (FSA) released an updated version of the Crop Acreage Report. According to the FSA, farmers have planted 142,691 acres as of September 1st. This figure is still lower than many expected compared to predictions on massive increases of acres planted this year. Since acres planted in a nascent market cannot be used to predict production due to unpredictable yields, a single government published data point is not sufficient enough to gauge the severity of an oversupplied market.
Many farmers are reporting that crops have exceeded expectations regarding yields as it is apparent that quality genetics, proper care, and hard work is paying off. The bullishness on yield predictions does not apply to every acre as other producers have realized less favorable results. Weeds and male plants have overrun many fields which raises questions of the potential CBD yields of the plants. Beyond the risk of crops exceeding the legal limits of THC concentration, mold continues to be a prevalent force in addition to what many producers are calling “Brown leaf spot” or characterizing as what looks to be Septoria – a fungus that can affect tomatoes and other vegetable crops. One commonality is that it is particularly prevalent in areas associated with unideal drainage, in areas of the Southeast due to a particularly wet summer, and more common among certain seed providers products than others.
Outside of the cultivation of the physical crop, drying solutions continue to be a topic at the forefront of many producers’ minds. Many drying facilities throughout the country are quickly filling capacity for the upcoming harvest. A lack of excess capacity combined with a limited network of these facilities is quickly creating a bottleneck that is sure to impact both the quality and total quantity of biomass available for extraction this year. Due to this bottleneck, and potentially less than ideal crop yields, a portion of the crop will not be harvested and brought to market. There are companies within the PanXchange network that still have capacity, and for those interested, please reach out to the staff at hemp@panxchange.com for more information.
In conclusion, we can look at seeds as a microcosm for the entire supply chain. Throughout this crop year, it will become apparent who is the most reliable in the business, what strains excel in certain geographies and growing conditions, and what will be the best harvesting, drying, and storage solutions. The market moving forward is in for a volatile period as speculation is driving prices, primarily due to a lack of concrete supply and demand data.
The future is murky as to where prices will travel over the next sixty days, and the clear picture will not come to fruition until the turn of the new year. The market is currently winding up like a rubber band due to uncertainty, exasperated by alarmists claiming an extreme glut while the amount of marketable hemp is uncertain, and fueled by a dearth of working capital on the buy-side. The fact is that there is not an abundance of biomass that is being traded either on a forward contract and spot purchases at this time. When the rubber band releases it’s energy, the market will take off like a roller-coaster.
