2020 Outlook: Julie Lerner, PanXchange
Julie Lerner is CEO of PanXchange.
What was the highlight of 2019?
In January, PanXchange launched the industry’s first suite of US industrial hemp benchmark prices and is ending the year as the de facto resource for the industry’s biggest producers, consumers, auditors and investors. In August, we launched our full hemp trading platform after developing the necessary institutional-grade standards, procedures and market structure over the previous seven months, with industry input. We continue to build the foundation as a long-term industry resource, adding new benchmark prices, new trading functionality and ancillary services. We are proud to provide a solution for the critical issues associated with this quickly commoditizing industry.
What trends are getting underway that people may not know about but will be important?
There is yet to be hard data on hemp supply and demand. As such, players across the supply chain are reliant on billion-dollar projections for the CBD market. While these estimates may be accurate, they reflect the retail shelf-prices of packaged consumer goods. Looking at the market in terms of quantity, the current size and potential growth of hemp for CBD is just a fraction of what the total market could be.
In more established commodity markets, traders have up-to-the-minute estimates of total market supply and demand, which is the essential component of assessing current market values and forward prices. While improving, today’s hemp market still has many unknown variables that preclude accurate pricing data. This is a considerable obstacle for participants and investors who want to transact as efficiently as possible.
What are your expectations for 2020?
In 2019 the hemp industry was chasing the margins of the CBD sector. While hemp has not yet proven to be a panacea to the losses farmers experienced with their traditional crops, we are still hearing that many will be doubling their efforts in hemp for CBD. This is despite the fact that input costs are high and output prices have steadily fallen.
In the future, we at PanXchange believe CBD will be just one of the many hemp industry sectors. We expect to see short-term pain continue as the market begins to understand that by quantity, CBD products contain very small amounts of hemp. Prices will continue to fall, which is a necessary economic factor to galvanize demand for industrial fibers: textiles, hempcrete, plastics. Despite this, the overall market opportunity is substantial, given that we’ve just scratched the surface of industrial hemp’s potential.
Firms are accelerating the buildout of digital transformation strategies.
Expect to see several new entrants in the equity exchange landscape.
CEO sees big potential for financial innovation in digitized assets.
Capital markets will continue to integrate and globalize.
SFTR implementation and the demise of LIBOR will be key themes this year.