Solid Through the Middle

The second week of the Keeneland November breeding stock sale was tough, but not in the way many have been accustomed to describing the commercial market in the wake of the Great Recession.

Buyers were struggling during week one to fill orders—many unsuccessfully. So they were camped at Keeneland’s back walking ring without any tickets stuffed into their catalogs during week two, hoping for opportunities to appear. They didn’t see any that another half dozen people hadn’t already spied.

When all was said and done, the buy-back rate for the sale had fallen from 23.3% last year to 14.5% and the median price had soared 59.1% to a record-tying $35,000 (matching record years in 2005, 2006, and 2007). The average price for broodmares rose 36.5%, while the average price for weanlings rose 30.8%.

The weanling market, in particular, responded strongly to the growth seen earlier this year in the yearling market, and the intense competition buyers faced during the second week of the November sale mirrored the buyers’ experience at Keeneland back in September.

Agent Marette Farrell had summed it up nicely during the second week of September.

“This used to be my spot,” she said of her ability to find quality horses at modest prices. “Now everybody’s here.”

When you can’t afford yearlings, you go look at weanlings. But for the weanling progeny of many sires, buyers were not getting much of a price break from what they had seen in September. For some sires’ weanlings, buyers wound up paying more on average than they’d spent on the yearlings.

Among the top 20 sires represented by at least three weanlings sold during the November sale, 10 had weanling averages that exceeded their September yearling averages. Claiborne Farm’s stallion Arch, the sire of 2010 Breeders’ Cup Classic (gr. I) winner Blame, saw the biggest yearling-to-weanling appreciation in value. Arch had five weanlings sell for an average of $224,000 compared to a yearling average of $138,289 for 38 sold. The others with robust weanling averages included Awesome Again, Elusive Quality, Ghostzapper, the late Harlan’s Holiday, Kitten’s Joy, Lemon Drop Kid, Malibu Moon, Speightstown, and the late Unbridled’s Song.

Top international sire Galileo headed the list with a weanling average of $388,333 for three sold, which was $134,667 below his September yearling average. Coolmore’s son of Sadler’s Wells also had headed the list of September sires by average price.

Some breeder/owners clearly see opportunities ahead and held onto their weanlings. Only two by Claiborne’s hot sire War Front were sold for an average of $775,000, and only one weanling each by Darley’s stallions Medaglia d’Oro and Street Cry was sold in November.

The most encouraging aspect of the November weanling market was that the average price increased without a crazy rise among the most expensive horses sold. As with last year, when the weanling market was particularly spotty, three horses sold for $500,000 or more. A total of 13 sold for $300,000 and up. This year the same number of weanlings sold for $500,000 or more and 16 sold for $300,000 and up.

Growth like this represents a shoring up of the middle market, which suffered a year ago.

Finally, it appears, producers have a shot at turning a profit—at all levels of the market. And with stud fees holding largely steady so far for next year, it appears breeders are well poised to enjoy at least a couple of good years ahead.

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