Going Back in Time to Understand the Yearling Sales' Future

The slump in the North American yearling market finally came to an end in 2011. Now, the big
question is this: How long will the rebound last?

Well, as the Pitbull song from the movie "Men in Black 3" tells us: To understand the future we have to go back in time.

By tracking the public auction yearling average for more than 60 years, we can see that the most recent downturn lasted
four years (2007-2010) and was the longest in the period dating back to 1946. The
longest upswing in the market was the eight-year period of 1993-2000.

Other significantly lengthy times of growth were recorded in 1975-1981 (seven years), 1950-55 (six years), and 1964-68
(five years). There have been two four-year upswings: 1970-73 and 2003-2006.

However, on four occasions (1959, 1961, 1987, and 1989), the spurt in average was a one-year development. In 1956 and 1957,
the average was the same: $5,355.

The good news: The average has increased for two or more consecutive years seven times, so multiple-year growth is more
likely than a one-year surge from a historical standpoint.

A drop in the size of Thoroughbred foal crops is bringing supply back more in line with demand and that's another reason to be optimistic about a sustained average increase. According to The Jockey Club, 38,361 foals were bred in 2005. The total for 2006 was 38,091, and
even fewer were bred in 2007 (37,462), 2008 (35,163), and 2009 (32,187). The trend is going to continue at least three more years, based on estimates of 30,000 for 2010, 27,000 for 2011, and 24,000 for 2012.

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