So, I came to the biomass auction today, and it was depressing to me. The market showed what it is, not what the farmers want.
Variable lot sizes, highest % was 17.3% and it got a dollar bid per % point but failed to meet the farmers reserve as did every other single auction besides one sale which was like an 80lb lot 10% that went for 1.25/%. Since only 1/50 auctions resulted in a sale, they stopped the auction for a “strategic break”. All the buyers were leaving, like getting in their cars leaving, as did I.
It’s possible they re-opened after convincing farmers to remove the reserve but when I left there were less than 10 buyers still seated.
The head of Tennessee agriculture kicked off the event saying how they were going to sell EVERYTHING.
I thought it was going to be bad, but it was an epic fail. Not only was it depressing to see old farmers crying, it sucks because they’ll probably never hold this event again.
Although sometimes bs government subsidies artificially set prices, like with corn, hence our national obesity issue…
Perfect example of why monocropping is a bad idea. If all you grew was hemp and the hemp market prices are racing to the bottom, you are fucked. If they had intercropped some hemp into a fruit/nut tree silvopasture system, they’d be at home eating bacon laughing at all the dumb monocroppers too.
Just to piggyback on what Future said - it is a buyer’s market right now. With so much hemp available, the buyer has the ability to shop around for the best prices. Most of them probably aren’t desperate for cash either. We’re seeing the same thing with hemp extracts - there is so much available, the producers have to sell it at whatever price they can to move it. Even though there is a ton of demand for CBD, not many products have heavy doses, and many CBD brands don’t go through their supply of extract very quickly.
I saw your pictures on Instagram, and I guess even though it looked like a good turnout, the attendees weren’t the whales the farmers were hoping for.
50 cents per point is still better than doing corn or soy. So on avg there are 135 bushel of corn an acre. Price per bushel right now is 3.70. For easy numbers that is about $500 an acre. Say you got only 1000lbs of biomass at a low 5%. That is still 5x what they would have got for corn. I know i went from a simple high view of the situation but it is still economical for the farmers even if they did not get to retire off of one years crop like some where thinking. (I understand the input cost are different for corn and hemp but i really can not see that offsetting the difference.)
She said that was the lowest bid she saw. Also, she is still there and they are about to start it back up. Currently there are 6 billion pounds of hemp in the U.S. right now…
The market is eating 1. Gold rushers 2. Small shops and 3. Inefficient large labs.
This price drop is creating the foundation for what the cannabis industry as whole is going to be. The millionares or “hares” as i call em have made their money and are stuck in their niche.
Now it’s time for the turtles to come in on the real niches that will make billions.
Its not about having the million dollar opportunity, its about making the billions on the millionares shortsightedness.
You’re right, prices will continue to drop until the industry finds some sustainable basement price. The only producers selling lower than that would be liquidating their stock and closing down shop. The lower it goes, the harder it is for the little processors. That is how monopolies are naturally formed. How many brands of salt can you name?
Like I said, almost all the buyers were getting into their cars as I was leaving. I saw the auctioneers trying to convince them to stay, but they’d just walk past and not respond…
