Last Updated on 6th February 2020

The price of industrial hemp is plummeting in the U.S. thanks to a “grossly oversupplied” market, says the industry’s leading trading platform.

New figures from Panxchange show that U.S. hemp prices have dropped considerably since 2019. Last July, a pound of hemp was trading for over $40. Now, a pound of hemp trades for under $10 per pound on the U.S. market.

So why the drop? One of the main causes seems to be that the CBD market may be growing too big, too fast. As a result, the industry is becoming oversaturated with farmers brands looking to cash in.

“Every way you slice it, the physical demand for the CBD market is much, much smaller,” said Julie Lerner, Chief Executive Officer of Panxchange, a hemp trading platform and benchmark pricing service.

“I’m a little surprised that retail prices have not started to come down yet. There’s so much competition.”

Hemp was quickly deemed as a potential cash crop after being federally legalised in 2019. However, it would now appear that farmers are now growing much more hemp than the industry actually needs.

“It’s a little bit chicken and egg,” said Lerner, in conversation with Bloomberg.

“There won’t be demand for it until prices drop, and people won’t be planting for the industrial fiber market until there’s huge demand for it, so we’ve got to get over that hump first.”