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Anyone who takes a look at the Swiss CBD market will find that the balance between supply and demand has been severely tipped. In the past few years it was mainly autumn when outdoor harvests caused prices for CBD flowers from all categories to drop, but now conditions prevail in which prices are close to production costs all over the year until late summer. In Switzerland there is overproduction, regardless of whether it is indoor, outdoor or greenhouse quality.
The cannabis market has many aspects that make us lose our nerves. But is the hemp business really that bad?
The British industry analyst CanXchange pursued this question in its latest report and replied to feelings and tendencies with clear facts and figures. For their study, the authors Jonas Bahceli and Sigfried Legeay surveyed 100 hemp farms and cooperatives in Europe to find out how market volumes and prices have developed over time. A few interesting observations emerged:
1. Large farms see the development of the hemp market more positive than smaller ones
One of CanXchange’s methods of assessing the market is what they call the “Farmers Sentiment Index” – an index that measures the optimism of the market participants surveyed. The results show that farms with large arable land (> 1000 ha) are more optimistic about market developments than farms with less than 500 hectares of arable land.
The reasons they state for this pessimistic attitude towards small farms include, for example, a lack of economy of scale aspects and difficulties in connecting to different distributors due to insufficient volumes. It seems to be emerging that the hemp market favors large companies with high annual revenues and production output.
Small note on the company dimensions: The Farmers Sentiment Index does not differentiate between entrepreneurs in the field of fiber hemp or hemp for the extraction of cannabinoids.
2. High demand for hemp stalks, hemp shives and hemp seeds
It is interesting that at the beginning of 2021 only the inventories for flowers are a bit overfilled. The stocks for stalks, hemp shives and hemp seeds, on the other hand, are relatively low, so there are corresponding opportunities for hemp entrepreneurs in this area.
The majority of respondents stated that they expect to be able to sell more than 80% of their goods produced in 2021 immediately. 60% of those surveyed even stated that they had already sold a large part of their expected harvests in advance and that negotiations were already underway for the 2022 harvest.
3. CBD flowers kg prices: 200 € – 2000 €
According to the market report, CBD outdoor flowers are still being traded at € 200-500 per kilogram. Indoor products, on the other hand, still achieve € 1000-2000. However, according to the report, there are some quick deals due to new producers flooding the market with cheap entry prices. The analysts anticipate that only a few new companies will enter the market in the near future and that prices will therefore stabilize somewhat upwards again. The authors see the next slowing development on the competitive CBD market in the perspective that CBD flowers will soon also be grown in France, which will again attract new companies with low market entry prices.
4. Niche products with lucrative prices
While products with CBD are facing an uphill battle, there is enormous potential to be seen in CBG, CBN or other niche, not yet trending cannabinoids. While the kilogram of CBD isolate is valued at less than € 1000 in the market report, CBG isolate, for example, comes to over € 3,500 per kg – this corresponds to 3.5 times higher prices compared to CBD isolate. CBD isolate is even sold for almost € 8,000 per kg.
Interessant: Auf dem CanXchange Marktplatz werden mit jedem Einzelkauf durchschnittlich 218 kg CBG-Isolat verkauft – relativ hohe Mengen Konzentrat, zu dessen Herstellung ca. ein Hektar benötigt wird.
5. Few CBD products from the USA in the European market and slow acceptance of water-soluble CBD
An interesting aspect of the market analysis is the discovery that only a few CBD products traded in Europe come from the USA. The fear that European prices would be depressed by US products favored by economy of scale effects are therefore more of a subjective protectionist nature. The actual market mainly includes products from the European area.
An interesting, promising product variation on the CBD market is water-soluble CBD. The price for this is relatively stable at 1500-2000 € and the demand market is growing continuously. Even if a boom for water-soluble CBD is on the horizon for the US market, there are still regulatory hurdles in Europe that prevent large potential buyers from buying large quantities of water-soluble CBDs now. Nonetheless, the market is already growing steadily, but slowed down by various compliance problems such as the Novel Food Catalog.
Hemp products on the way to become a basic resource / commodity that is sought after worldwide
According to CanXchange, products made from hemp are enjoying increasing global demand and form the basis for numerous products in the construction, fashion and food industries. This lays the foundation that hemp and its products, like corn, wheat, cotton, sugar and other basic foodstuffs / basic resources, can soon be traded physically and in the form of financial securities on a central world market. Before that happens, however, a few basic requirements must be met in the cannabis market:
- standardisation
- risk management
- liquidity
We are honored that the Cannavigia Cannabis Compliance Suite is proposed in the market report as a solution building block for the creation of these basic requirements. Our goal is the integration of cannabis into existing markets – with our software solution we offer a platform for the documentation of all legally required processes and compliance with guidelines and advise cannabis companies from producers to processors to sales. Regardless of whether it is CBD, fiber or hemp seeds: For us, a carefully documented value chain is the key to officially accepted products and a market-accepted standardization of product quality.
Hier können Sie den vollständigen Report herunterladen: https://www.canxchange.eu/contact-10
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