We may still be living under a volcano. For now, however, the first major blood supply cycle after the 2020 trauma represents an almost symmetrical V-shaped recovery, which dates back to the $ 200 million breakthrough achieved by the US 2-year market in 2019. Despite the replenishment with a diminished horse pool, compared to the time, this area resembled a giant stress ball regaining all of its former buoyancy the moment the pressure was released.
It is of course the young shippers who were the first affected by the pandemic last year. Somehow, they made it through OBS March, although an air raid siren might as well have welcomed every horse into the ring, before a dazzling series of cancellations or postponements. From the catalogs retrieved, the scratch ratio approached two out of five as alternative solutions were improvised with trusted clients, from private sales to racing partnerships. Those who persevered in the ring did so with a “fire sell” mentality: cut your losses, get your jabs, start over. The final calculation, at public auction, obviously didn’t give a full picture but offered a striking measure of the pain: overall revenue slumped 38%, from $ 203,206,700 to $ 125,956. $ 800 and transactions average 24.4%, from $ 95,807 to $ 72,388.
A $ 200 million juvenile market in 2019, remember, had been another milestone in a breathless bull run for the entire bloodstocks industry. Some of us then responded by waving our fingers at the wise: since sustainable growth had historically proved impossible, capitalism rather depended on the cyclical correction of overheated markets. But just as no one could have predicted this particular needle, neither could anyone confidently say that a new balloon could be inflated virtually overnight.
But that’s exactly what happened. With obliging cleanliness, the 2021 2-year market, which closed in Santa Anita last week, rebounded 59.4% from last year’s crash, to $ 200,782,050. The average, too, rebounded 28.2% to $ 92,826. Removing the freak market 2020 from the comparisons gives a remarkably strong match with the skyrocketing trade of 2019, the turnover is only 1.2% lower and the average 3.1% lower.
Unsurprisingly, the consignment was a bit leaner this time around. The pinhookers had tightened their belts, while the yearling sellers were arguably less ambitious with their reserves (being less inclined to just hold a horse and try again next spring). Let us also not forget a continued decline in the available pool, with North American foal production falling from 35,000 to around 20,000 since the previous economic shock of 2008. This narrower base has improved the strength of this market. The level of RNA in juvenile sales in 2007 was about one in three, and has steadily been one in four or better in recent years.
Indeed, the liquidation rate is the most spectacular of any recovery index in 2021, with as many as 83% of animals in the ring finding new homes, compared to 77.4% in the booming 2019 market (and most important). In other words, the symmetry of this “V” rally can be fairly well attributed to pure demand. And that might not come as a surprise, given the consensus forecast. Yes, the pandemic has been catastrophic for many businesses. On the other hand, those whose wealth is not impaired find themselves confronted with a pent-up spending capacity.
For a decade, before the pandemic, the entire international blood market had fed on the fiscal response to the 2008 crisis, with quantitative easing and marginal interest rates favoring liquidity. Then come the tax breaks granted to the richest during the last presidency. Add to the mix a universal suppression of indulgence over the past 15 months – everyone, after all, has been freshly reminded that life is for living – and you have a perfect recipe for renewed demand for luxury. (And that, as we who think of them as a vehicle of subsistence tend to forget, is precisely what the thoroughbred racehorse is.)
Certain commentators on the economy at large certainly consider that this is too fragile a basis for a lasting recovery. Their fear is that the distribution of wealth, which has not been so unbalanced for a century, leaves too many people unable to contribute to the consumption that runs the economy. If so, the stakes are clearly high for the various stimulus packages.
Indeed, those who predict more of a “K” shaped recovery see many of the ingredients that fueled the Great Depression come back into place, with purchasing power only meeting productive capacity through personal debt. Marriner S. Eccles, Chairman of the Federal Reserve under Roosevelt, compared the Depression to “a game of poker where the chips were concentrated in fewer and fewer hands, [and] others could only stay in the game by borrowing … When their credit ran out, the game stopped.
So while the resilience of this particular market is a huge relief to many professional riders, who make a modest living from their skills and hard work, you can bet some analysts are aligning it with the prices of the. art and sports cars and foresee the problems to come.
Regardless, for now, we can be extremely grateful for such an enthusiastic resumption of investment in our industry. As a result, many low-income households have recovered. The juvenile sector, after all, is perhaps the one that sets its sails most bravely in the face of inclement weather. He’s trying to get some extra value out of a teenage thoroughbred who may have crossed the ring twice already, as a weaned and yearling – with no safety net, no plan B. Plus, a very yearling market. strong simply increases base costs and places an intimidating bounty on firing a “bullet” at the undershoot show.
We are therefore looking for riders with unusual flair and endurance. Volatility is ingrained in their agenda. We read all of the home run headlines, but each one needs to fix the damage caused by misfires. Such a fluctuating market therefore only adds to routine precariousness.
Let’s take a snapshot of the middle market, where so many pinhookers operate, via the median at Keeneland in September – and compare that with the average juvenile dividend.
Obviously, we don’t compare things like the others, but we can see that even in the best of circumstances, shippers find themselves either stranded on the beach or during a rising tide, with very little compromise. The pinhooker that had operated in the Keeneland mid-market in 2019, with a median of $ 47,000, sold last spring in a market of $ 72,388 on average. That didn’t leave much work, once the interim bills had all been paid.
Conversely, they could restock much cheaper – Keeneland’s median of $ 37,000 – and this time around, an average of $ 92,286 will have allowed many to plug some of the holes in the roof.
But it’s a tough crew, that’s for sure. While this was a pretty eccentric gauge of their work, in percentage terms the 2019-2020 cycle, as brutal as it was, was little different from those of 2013-14 and 2015-16. What a way to earn a living!
As for the stallions who have best served their cause, I still consider the table of juvenile averages to be misleading. Many stallions are represented by such a small sample at the 2-year auction that a single knockout price can mask a multitude of deficiencies; whereas often even the highest averages fail to match the performance of the same crop in yearling sales. Let’s take a look at the top 20 bulls (at least four 2 year old horses sold) on average, but also compare these yields with their averages / medians with the same crop in yearling sales.
We see that even the class leader Quality road, with a $ 1.5 million foal to increase his average, actually had an unchanged median. Finalist Uncle Mo, also helped by a sale of $ 1.3 million, made a presentable lead on average, but its median was down to half. And third Nyquist, which has made impressive gains on average, has made only modest gains from its median.
In fairness, remarks about a small sample go both ways. The median, from such a small group, is perhaps not so informative. Nevertheless hats off Flatter, Liam’s card, Maclean’s music, Swirling candies and Frosted to double (or better) their medians by passing the stock through the 2-year shippers. Prank callThe fine beginnings of in this sector are also clearly visible, whether on average or in median. But one or two of the biggest hitters missed their goal this time, for once the same champion in evil. His rise had been very well measured by this sector, but in 2021 he only rehoused 21 of the 35 juveniles, with his average and median both declining. A rare blip, and if a whole market can bounce back from a lackluster year, so can the stallion of the decade.