CBD isolate correction/ Crash Q2 2019

Kush.com is the largest market of it’s kind in all my searches. Prior to this year, before it was federally legal there was a shortage and now every tom dick and jane is trying to get into the gold rush. Those days are rapidly coming to an end.

I think I’ve said this several times in the last few days, but CBD prices are crashing as supply outpaces demand by a minimum 5:1 and on the high side of 10:1

I disagree with this article that the prices will level off at $2300 per kilo and CBD biomass $3.50/lb. I could see Biomass at 10+ % pesticide-free going to $10/kg

Processors who are taking payment in isolate will stop doing so as it becomes more difficult to sell isolate, Mom and Pop farms (under 100 acres) will get crushed as the big guys (500+ acres) have the ability with scale to discount more heavily. Price to produce a KG of isolate for the smaller farmer ranging in the neighborhood of $580-800. Big guys probably sub $300 due to scale.

I’ve seen this in oil market, fracking in 2016 as regulation were coming in and prices for natural gas /oil fell off a cliff many in this space lost their pants. The same will happen with anyone who entered this market in the last 12 months.

Furthermore, there are far more brokers than producers and producers is often a broker. All these companies who have “contracts”, for 500+ kg a month, they will break them, sellers will take them to court and they will declare chapter 11 to break it. whoops. Those contracts don’t mean shit unless they are so iron clad that the seller gets your firstborn if you default.

Thus, in the near terms, those with 99%+ CBD isolate that is pesticide-free cat2 or cat3 tested COAs on single could get $4000 per kg. , 10+ 3500, 100+ $3000 as of today July 17th. However, by the next harvest Croptober, you’ll see that price drop by half. I Really see the bottom of this year on bulk order of CBD isolate to be $1000/kg and singles to be $1800-2000

Luckily, CBD distillate is still a time-consuming process that requires considerable more technical skills and has been overlooked in favor of isolate. I see 90% T free distillate falling to $5-6k by end of the year as prices bottom for an isolate .

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terpenes/heady hemp

If you are a small time grower, you should be thinking with a small time grower mindset. There are plenty of options that are currently not available to large outfits because their control over the crop slips at that scale

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At the same time most little guys are all trying to do or use the model of the big guys. Therein lies the issue. Terpens is the way to go, but it’s such niche that explaining that to average farmer falls on deaf ears.

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Saudi Arabia started to undercut the market for oil - market domination - and that lead to American exceptionalism doing what it does best. Ingenuity and innovation. We - USA - were able to advance our tech and now we have saudis by the balls because we can produce oil cheaper by the barrel than any time before.

I’ve been going around and meeting processors and - my limited knowledge on refineries :wink:- not a single one is ready for the price drop. You don’t know what you don’t know. There is a reason why The oil industry is so niche and has so many different markets. This pipe dream where everyone is going to be vertically integrated most likely won’t happen for 95% of people. If you have 20-30 million minumium you can have a operational refinery that does everything you need it to do and efficiently. Other than that…get good at one thing and one thing only. That is your staying power. Example: ethanol is scarce right now…biofuel plants have been competing for pennies on the dollar and our trade war with China has made us use our corn supply for food. In a normal market 38% of corn goes to ethanol production. For all you Californians this is why your gas is so expensive because no ethanol. Plants are shutting down - even tho they were “players”. Every penny counts and it’s knowing your place in the market. If they practiced network orchestration they would be fine. Don’t be greedy and don’t get to big. Work with each other and you will be fine. That’s where oil and gas got its reputation for being the “good ole boys network” .

Even if you are “lucky” and make it through the big hurdle. You need to realize that there are guys who doing hundreds of tons of oil a day and even then…They don’t realize yet how easy it would be for the to switch a line. Do you think they have any care of buying you out? They already have the chemical engineers, the infrastructure and the means to do this - and yes I keep my mouth shut when talking to the guys that make me look little so I got y’all covered and I don’t plan on them knowing for as long as possible. I’m on yalls side.

Being on this site I know of a handful of niches that will come into fruition because I’ve seen it before. Don’t reinvent the wheel. :sunglasses:

Just my 2 cent…dm me and I can go in more details. I like friends :rofl:

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It’s crowding that is cause the market to implode. Everyone went for CBD isolate as it’s the low hanging fruit, saw how much it cost to produce and everyone ran for that. Whereas distilliate for CBD, CBN, CBG requires significantly more work, knowledge, and resources.

The big guys with 20-30mm will be fine. The little guys will get crushed. I had small farmer offer me 10kg for $50. No way am buying above market. I waiting for the panic selling to ensue , then Im a buyer.

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I agree 100%. However I don’t think it was just crowding. I also think cbd isolate was popular due to the legality mess that is between states. This FSO/BSO were limited and a lack of education probably had something to do with it.

If you are a lone fish in the big pond you will be eaten up…that’s why you need to school up :rofl::sunglasses:

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Agreed. The best heady hemp I’ve seen comes from my small scale hemp farm in southern oregon (Oregon Sol) where they have roughly 1000acres in cultivation.

Most of my large clients, 20k hectares in Romania, 100k hectares in China, for example, are growing industrial fiber crop and eeking marginal CBD yields out of it.

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@Stevesgoodsonline

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The real question is what do those of us who are already balls deep do with this information?

I suspect like most rushes, some people will get rich and some people will get ripped off, but the margins some saw last year definitely won’t be the same this coming harvest. Which will be rough on the people going all in on the assumption that they can make the same kind of money. I genuinely feel bad for some of the farmers who don’t have any cannabis experience, thinking they’re going to have a couple acres of grade AAA smokable that they can sell for huge $/lb prices, who don’t have the experience to keep their crop all female and avoid the seeds, and the lower commodity prices and yields that brings.

In the long run I think those of who are keeping eyes on margins and efficiencies will do alright, it looks like the market is already correcting prices from “pie in the sky” towards “honest work”

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Learn your Upstream -> Midstream -> Downstream process.

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You couldn’t pay money for this type of knowledge…thank you for your insight.

Lol at the clowns who gave me shit in January about the price crashing within months, they were so certain that price would hold steady at $6,000 for single kilos that they called me an idiot for even suggesting that the price could tank lol

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If biomass prices tank sufficiently, even $1000 kg can be profitable if you are large scale and can sell it all.

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The farmers will grow the biomass at whatever price the market sets… I’m wondering about all these 375 to $4.50 contracts per point out there…i don’t know of many 2018 that were honored but people are still thinking these 2019 contracts will be… And if you want an idea Google 2012 cotton contracts default

Example of one deal i heard of

4000+ kg per month for 48 months , @ 4500 per kg for 4+ year contract and the price isolate drops like a rock. As long as price stays above 4500 should be an issue.

I’ve seen a spot buy of 25,000kg @3750 per kg

** above assume 99%+ pest free isolate

There’s no standard that everyone follows, so prices are all over the place and no futures market. If my only futures market is a bogus contract to buy, but I don’t have the right to sell futures to decrease the price then it’s a bad joke supported by large producers.

The defaults are coming, just curious how many

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prices will likely fall to a sustainable level. it’s very hard to discern when that may be.
I suspect the market to slowly buildup as most markets do–along with supporting demands.
Just like the Dot com bubble…things will hype then implode, then correct, then buildup.

They have already imploded. Geographically prices are different but they are all falling fast.

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I’m already seeing isolate @ $2100/kg and last years low cbd biomass (5-7%) for $5/lb coming out to less than $1/PPP.

I’m thinking isolate prices of $1500-1800/kg are coming in the next 2-3 months with biomass around $1.5/PPP

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Some folks i know are able to process biomass to crude (winterized decarbed )
At a unit price(kg) of 130$
15 000 kg a day so if all crashes your estimates are still on the high side
They claime isollate prices can drop till around 800 /kg and still make profit

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That’s excellent to hear as cbd isolate makes great d8 and d8 makes great vape cartridge cut.

Win win as far as I’m concerned.

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