Wait a minute. Won’t seven fat years be followed by seven thin years? The market path has taken in 2021, we have only seven minutes of lightness. There is, to be sure, no reset-type approach necessary, logically and historically, for the cyclical workings of capitalism.
The prospect of some such “correction” is the only latent consolation, as cold as it is, for a blood ingredients market already facing the global economic shock of the pandemic. Because a decade of near-constant growth hasn’t even ended due to any inherent weakness in the industry: we’re just being expanded, gratuitously, by something no one can calculate. included in their calculations. (Not, anyway, without Pharoah summoning Joseph from the dungeon). If we take the potion, at least we know that the chart now has more room to accommodate a new spike in the profit line.
In this case, the market barely wobbled. Admittedly there have been some horrifying days for the 2-year-old sector, while clearance rates often show a troubling pragmatism, especially in the European market. But overall demand on both sides of the Atlantic proved much more resilient than anticipated. And we’ve all received well-deserved relief, among those who feel trapped by our sluggish business cycle – the way our business values are back in 2021.
Some will then wonder if we should renew their anxiety that at some point the market is still bound to overheat? After all, the bull cycle extending into 2020 has been fueled by fiscal responses to the last emergency in 2008: a constant use of the economy’s cash, through low interest rates. and quantitative easing. This recovery has had a very different feel. It must negotiate over rising inflation and broken supply chains, while Friday’s stock market panic betrayed an ongoing malaise.
Well, whatever happens, our particular niche economy shouldn’t ignore a “correction” that actually took place, this time last year. At that point, even volatility seemed like a distant prospect. Everything is deadlocked. Whether on ethical or business grounds – or both, which should probably always be the case for capitalism to function properly – many stud farms feel obliged to give breeders a The pet finds that they are “all in here” and takes a scythe to pay the fee.
They also don’t just say a good game. Sure, even in the best of times, they’ll always trim a few stallions that need a little help. But this time, dozens of top Bluegrass farms have cut their total stallions with the first ponies due, for example, by 16.2%. In 2020, they have reduced the previous amount by only 0.5%. Those who are about to give birth to their first calves have dropped by 19.9%, compared with 8.33% of previous calves in 2020. And those giving birth to their first calves are down 22.8%, one time off. more than double the 10.2% rate of the same group the previous year. . What’s more, many proven, high-end stallions – who really have to pay a premium, as a relatively safe harbor in turbulent times – have also made generous cuts.
Now that the boom times seem to have returned so quickly, however, it’s hard to see how stud accountants can go back to breeders and say, “Well, thank goodness, the storm seems to be coming. like it’s calming down. We hope you will remember how we stood by your side for a much needed hour. But you will understand that now we have to restore our prices to what we feel are competitive and mutually viable, before last year. ”
Instead, they force breeders to traditionally breed in a normal trading environment – only this time, of course, from a much lower base. And that means one of two things. Stall fees were too high, until last year; or now they are offered for sale to such an extent, in a noisy market, that breeders have a historic opportunity.
Take a look at Omaha Beach, who looks very valuable in retirement with Spendthrift at $45,000 and validly welcomes 215 mares in 2020. The one and only reason to cut him down to $35,000 for 2021 was the late B. Wayne Hughes – leading, as it usually is, and promptly emulated by most rival farms – responding to the crisis by reducing 15 of the site’s 21 stallions. camp. Remember when Bolt d’Oro started the same with 214 mares, in 2019 Spendthrift kept his 2020 charge.
Omaha Beach quickly republished her exact debut book, with another 215 covers, and had a spectacular debut in sales, outperforming the average weaning freshman at $144,692. However, the Spendthrift team, respecting Hughes’ legacy, delighted the client by offering him an additional $30,000 cut. This is the kind of gesture commonly performed by commercial farms when a young stallion, whose early supporters are explicitly using new stallions, has to compete with recruits in the meantime. are brought into play in the next two turns of the carousel. It’s an incentive to keep the faith, anticipating momentum to continue at desirable sales levels and then on track. So it’s a coherent and familiar strategy, although not one that every farm will consider particularly necessary after the sire has passed the first tests (book size/ launch sales) as well as Omaha Beach. However, if it weren’t for the pandemic, Spendthrift would certainly have cut him from $45,000 to $40,000. So, in fact, we’re saving 25% on one of the most affordable prospects in Kentucky – even though his pony market has essentially regained its 2019 value.
We all know by now that our industry faces some nasty challenges; and it doesn’t solve some of them well. But there are 51 more weeks of the year for us to nibble on those things. Let’s recognize some positives. A lot of people out there seem eager to buy themselves a Purebred, right at a time when breeding one becomes more affordable. Perhaps, after the disappointments of the lockdown, the wealthy were reminded that life is for living. If not, well, their rich wallet in some cases even threatens their ability to invest.
So whatever twists and turns await, the initial path out of the pandemic has proven to be straight and smooth. And let’s not forget that we all get some free gas in the tank.
Sure, maybe the stall fee was too high in the past. But they represent an important variable, as other basic costs – such as maintenance and labor costs – are quite stable and sufficient to make ignoring your stallion selection a cornerstone. wrong economics. Given the level of “correction” we had to absorb, according to outside demand, we should consider ourselves lucky when stallions volunteered to replace one of theirs.
