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HIGHLIGHTS
  1. PanXchange launches OTC trading platform for four hemp products
  2. Bulk of hemp offered on Canadian Cannamerx is from U.S. and European Union
  3. Cannabis Benchmarks data show U.S. hemp prices dropping since April

Commodity exchange operators are racing to establish transparent pricing and become the go-to trading platform for U.S. and Canadian industrial hemp, the newest cash crop to be federally legalized in the United States that often relies on word-of-mouth for price discovery.

PanXchange, an over-the-counter niche trading platform for physical commodities based in Denver said Thursday it has launched an institutional-grade industrial hemp exchange where buyers and sellers can trade four hemp products, as demand for the plant’s cannabidiol (CBD) is widely expected to soar.

This follows months of establishing benchmark prices in the United States for industrial hemp, which has been grown legally in Canada for roughly 20 years and in various states under regional laws, was nationally legalized last December with the 2018 Farm Bill. Federal U.S. legalization means processed hemp products can now cross state lines and production is expected to rise.

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“The marketplace will allow producers, processors, trade houses and end‐users to participate in a transparent and efficient cash market for industrial hemp products and will ultimately pave the way for the creation of hemp derivatives contracts,” PanXchange said.

PanXchange, which facilitates the trading of other niche physical commodities such as sand used in fracking and East African agricultural products, now offers an electronic trading platform for hemp biomass, crude oil, isolate and distillate. These raw materials are used to make CBD products, which many consumers associate with health and wellness.

“Despite the massive market demand for industrial hemp, the ability for producers to transact with processors and end‐users in a transparent, efficient manner is woefully inadequate,” said Julie Lerner, chief executive and founder of PanXchange.

Cannamerx, a Canadian auction platform for wholesale cannabis, added hemp – biomass, flower, CBD distillate and CBD isolate – to its commodity list in March. Since then, more than 12,000 kilograms of hemp biomass, and 1,000 kg of hemp extracts and isolates were listed for sale on the spot market, primarily from the United States and European Union, said Dietwald Claus, founder and chief executive of Cannamerx.

Roughly 15 per cent of the hemp biomass offered on Cannamerx since March was Canadian while most of the rest was in the European Union. Almost all of the CBD isolate made available on the auction site was in the United States, Mr. Claus said.

“Prices for hemp biomass in Canada are significantly higher than in the U.S., as are prices for CBD isolate. Still, because of the problems in the supply chain, a lot of farmers who started growing hemp this year, whether in Canada or the U.S., may find it very difficult to sell their product at a good price, if at all,” Mr. Claus said, declining to provide specific prices.

“That said, a lot of smart, experienced ag companies and entrepreneurs are entering the hemp market, and we expect the situation to be much better next year.”

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Cannabis Benchmarks, a U.S.-based pricing company that added hemp to its offerings earlier this year, said in its July report that U.S. hemp biomass prices for quantities up to 25,000 lbs were down 12 per cent from April, the first month the company assessed hemp prices.

“Of the several possible factors exerting downward pressure on prices, the most common response includes market stabilization, in addition to increased processing and extraction capacity easing some of the bottlenecks in the supply chain,” the Hemp Benchmarks report said.

“It is clear that we will see a record yield of hemp biomass this year, as more producers, experienced and otherwise, have jumped on the hemp bandwagon.”

The Canadian Hemp Trade Alliance expects Canada will harvest a record hemp crop in 2019 at 125,000-175,000 acres.

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Editor’s note: This version has been updated to clarify comments about hemp prices by Cannamerx CEO Dietwald Claus.
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