cannabis benchmarks weekly report -- published august 25, 2017
U.S. Cannabis Spot Index up 5.1% to $1,609 per pound.
The simple average (non-volume weighted) price increased $170 to $1,828 per pound, with 68% of transactions (one standard deviation) in the $1,099 to $2,557 per pound range. The average deal size increased 2.7% to 8.5 pounds from 8.2 pounds last week. In grams, the Spot price was $3.55, and the simple average price was $4.03.
Indoor product’s share of the total observed weight moved held steady week-over-week, even as the relative frequency of trades for such flower increased by 5%. The corresponding decrease in trading frequency was borne by greenhouse product, which also saw a 5% contraction in its relative volume compared to last week. Outdoor flower’s share of the total documented weight moved swelled to nearly one-fifth, up from 12% last week.
Indoor flower spanned from $999 to $5,800 per pound; the median price was $1,975lb.
Greenhouse flower spanned from $800 to $3,200 per pound; the median price was $1,305/lb.
Outdoor flower spanned from $700 to $1,600 per pound; the median price was $1,000/lb.
The U.S. Spot Index was on the upswing this week, exceeding $1,600 per pound for the first time since the beginning of this month. Volume-weighted average rates for all three grow types saw week-over-week increases, with warehouse product seeing the largest proportional and absolute price rise. Rates for outdoor flower were up during a time of year when rates for such product are typically declining, which they may well still do in the coming weeks.
Colorado’s Spot Index achieved its highest level since April, but still has not exceeded $1,300 per pound since February.
Volume-weighted average pricing for indoor and greenhouse product in Colorado continued to track very closely together, while rates for the same two grow types in Washington State converged more closely than they have in recent memory.
The table below illustrates the U.S. Spot Index, along with the volume weighted averages for all transactions accompanied by a medical or recreational / adult-use designation.
Pricing for flower wholesaled in medical and adult-use markets converged this week after moving in opposite directions over the course of the prior three weeks. National-level wholesale rates ticked upward slightly, driven primarily by a significant increase in Michigan’s Spot price, as well as a small price rise in Arizona. Increases in supply side pricing in Colorado, Washington, and Oregon resulted in a nearly 11% jump in rates for product to be sold in adult-use systems.
September Forward closes unchanged at $1,550 per pound.
Forward arrangements represented more than 6% of overall market activity this week. The average forward deal decreased to 43 pounds, from 47 pounds last week. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 32%, 48%, and 20% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 53 pounds, 41 pounds, and 32 pounds, respectively.
At $1,550, the September Forward represents a discount of 3.7% relative to the current U.S. Spot Index of $1,609. The premium or discount for each forward price, relative to the U.S. Spot Index, is illustrated in the table below.
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A new Seasonal Climate Forecast encompassing the fall harvest months of September through November was released recently by the Oregon Departments of Agriculture (ODA) and Forestry (ODF). The forecast opens by cautioning that overall confidence is reduced, as the Oceanic Niño Index (ONI) is within the El Niño Southern Oscillation (ENSO) neutral range, which means that a wide range of weather conditions are possible. Additionally, the seasonal forecast presents monthly temperature and precipitation levels relative to historic averages, which can obscure brief periods of extreme weather, such as a few days of heavy rains or extreme heat or cold.
That said, the ODA and ODF meteorologists state that a period of well above average rainfall is likely in October or November, a prediction that could have significant implications for the size and quality of the state’s full-term outdoor crops. Overall temperatures are expected to be close to average, or just slightly above average, in the three month span under consideration, and the forecast indicates average to below-average rainfall in September for the south-central part of the state that is home to a significant amount of outdoor cultivation. However, come October, the meteorologists project rainfall that is roughly 30 - 50% above average for much of the state, including the south-central regions. However, it should be noted that one of the three analog years employed to project the forecast did see mild, dry conditions. Abundant precipitation - roughly 30% above average - is expected to continue into November, although, again, forecast confidence is below average.
Overall, outdoor farmers - particularly those in south-central Oregon - could be well-served to consider making preparations to bring in harvests quickly, if the predicted rainfall does indeed manifest itself, and in some cases early as well, for those varieties that growers may have been planning on letting flower into late October or November. Otherwise, cultivators could see significant crop loss due to mold, particularly under Oregon’s stringent quality-assurance testing program.
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25 August 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved