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  • Rohan Hiatt

Market Conditions Create Growth Opportunity for Hemp Fiber & Grain

As comprehensive data surrounding hemp cultivation becomes increasingly commonplace in the United States, hemp fiber and grain farmers have an opportunity to use this data to identify pathways to growth. After the U.S. Department of Agriculture published its seminal National Hemp Report for the 2021 harvest season, private analysts have begun providing more robust outlooks on the state of the national hemp market. This turn has resulted in expanded engagement by the broader commodity exchange industry.

Projections for 2022

PanXchange, a leading physical commodity market and analysis firm, recently established an active hemp market on its live trading platform. Utilizing data sourced from its hemp marketplace, PanXchange released its projections for the 2022 harvest year. While the projections paint a fairly negative economic outlook for hemp, the current conditions nonetheless represent a significant opportunity to identify aspects of the market that require strengthening.

Compared to total hemp harvest volume in 2021, projections for 2022 convey a more than 45% expected drop in harvested acres: from 36,925 acres to around 20,000 acres. While this loss in volume is reflected in individual harvest predictions for each hemp submarket, lower volumes are expected to impact the flower, grain, and fiber submarkets differently.

Source: HempToday; NASS (2021); PanXchange (2022)

Industry Economic Conditions

In general, PanXchange characterizes the loss in harvest volume for hemp flower as directly related to poor industry conditions and contract prices. Hemp biomass for CBD and other cannabinoids, once the most lucrative industry submarket, is currently experiencing a dramatic price bust. As flower farmers weigh their options for adjusting to current market conditions, they should seriously consider pivoting toward hemp fiber or grain production.

Since the markets for hemp fiber and grain remain in their infancy, they do not yet possess robust enough economic characteristics to easily accommodate further growth. Barriers to fiber and grain industry growth arise from the lack of supply chains and accompanying market infrastructure to accommodate an increase in hemp commodity volume. Hemp fiber and grain producers in turn lack the ability to efficiently offload their inventories. As a result, a significant opportunity exists not only to encourage the growth of the vertical supply chain for hemp fiber and grain, but also to identify other areas where producers experience operating losses that limit their market participation even further.

One other limiting factor identified by hemp fiber and grain producers across the country stems from federal and state cannabinoid testing requirements. Products created from hemp fiber and grain do not contain relevant cannabinoid concentrations. Processing facilities for these products further reduce the potential for significant cannabinoid levels to persist. Exempting hemp fiber and grain producers from the rigorous testing requirements apropos for hemp flower producers will grant these farms the necessary financial leeway to invest in submarket-specific needs, such as supply chain infrastructure.

Looking Forward

Despite the negative economic outlook in the status quo, analysts nonetheless encourage optimism. A lack of sophisticated market infrastructure does not change the fact that buyer interest for hemp fiber remains high, and there is evidence that fiber processing capacity conditions will improve throughout the next year, as well. With regards to hemp grain, producers simply need to position themselves to compete more directly with Canadian hemp grain importers. Since the majority of hemp grain supplied to the U.S. is produced in Canada, hemp grain producers are encouraged to identify ways to leverage their domestic advantage in order to capture a larger percentage of the market share. Regulatory impediments also continue to play an outsized role in hindering the competitive potential of domestic hemp producers as a whole.

Structural economic barriers hindering domestic hemp market growth are not insurmountable. We see a clear need to have industry advocates come together to address these issues collectively, so that hemp markets can achieve the robustness necessary to encourage expansion.


Flight from hemp continues in U.S., with harvest expected to fall by nearly half, HempToday (Oct. 10, 2022),

Access Hemp Trading, PanXchange,

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