Oppenheim: Market Report

In last Monday's Weekly Sales Ticker (click here)–and with Arqana December, starting today, still to come, we found that 2,492 foals sold at the major mixed sales (Fasig November, Keeneland November, Goffs, Tattersalls) so far this year registered a $6.65-million (5%) gain over last year, and a $22.6-million (18%) increase over corresponding 2013 figures. On the other hand, a look at the bottom graph in today's Sales Ticker tells us that, with 17% more horses catalogued than in 2013, the overall mixed sale gross has fallen by $58 million, or 12%, since 2013, while the average price has dropped by 18%. The 2013 figures do include the Paul Makin dispersal at Goffs November, which grossed €2,734,000. Even converted at the prevailing exchange rate then (the Euro has dropped by over 20% since), the Makin dispersal comes out around $17.2 million. If we subtract that figure entirely from the 2013 mixed sale gross (Deauville not included), the 2013 gross would still have been around $478.7 million, so the drop in gross in the corresponding sales this year would be about 8%.

When we subtract the foals and the Makin dispersal, the non-Makin dispersal gross works out around $351.2 million in 2013, compared to about $287.8 million this year. The non-foal, non-Makin Dispersal mixed sale market has fallen by $63.3 million, or 18%, in two years.

We constantly preach, as you know, that we have to be very careful when comparing non-foal Mixed Sale statistics, because the composition of the catalogues–what top fillies and mares are consigned to auction–can change significantly from year to year; for example, it probably wouldn't be as accurate to declare the non-foal section of the mixed sales down 22%, which would include the Makin dispersal. So it is open to debate whether the 18%-drop in gross cited is because of lesser mares and fillies being offered, or because of an actual decline in the market from the 2013 post-recession peak.

For anyone who has been at the sales this year, the answer is pretty clear, and it isn't a substantial drop in the quality available, in fact one Tattersalls official told me he thought this year's Mare catalogue was significantly stronger than last year's. The rise in not-solds and drop in the clearance rates is an indication; in fact, on Tuesday at Tatts, nine fillies or mares went through the ring at hammer prices of 950,000gns (about $1.5-million) or more; four were sold, five were bought back. Sure, a lot of consignors got their reserve prices way wrong, but that may not have been consignor greed; it may have been that they valued their animals at roughly the same level as in the last couple of years, but the market was not there for them. Just two months ago the yearling market crested the $1 billion mark for the first time in seven years, but confidence is shaky among breeders. The consensus of market participants with whom we spoke is that the market for the 'ones they want', in the 200-500,000 range (whichever currency), is very strong; but, both below that and above that, demand is much weaker. That's to be expected at the bottom end, where returning producers outnumber new and returning buyers. Whether because continuing low oil prices and other global economic and political concerns are discouraging top-end mare buyers, we can't be sure; but what we can be sure of is that demand for breeding stock at the top end is down. Arqana could buck this trend; it's a sales company that has been very much on the up in recent years (annual sales increased from €102-million in 2013 to €116 million last year); their December sale has grossed €26 million and change the last two years. But even if they do buck the trend, they're not going to reverse it. The mare market is shaky, above and below the 200k–500k range.

One of the real indicators of weak top-end demand was the fact that four of the five mares which went through the ring at Tattersalls last Tuesday in foal to Dubawi were bought back. John Ferguson bought Hanky Panky off John Sikura for 2.7 million guineas, but he didn't buy the other four, nor did anyone else in spite of the fact Dubawi is about the toughest horse on the planet to get to. However, fortunately for the sires which stood their first North American or European seasons in 2015, and are first-year covering sires, the mares in foal to them were not priced out of the existing market.

Among the European sires which have their first mares in foal selling, Coolmore's 2014 G1 Epsom Derby winner Australia (Galileo) and Juddmonte's Kingman (Invincible Spirit), the top 3-year-old European miler of 2014 (we were all calling him 'Frankel Junior' at one stage, he was so dominant), are the two leaders on in-foal mare average going into today. Australia has had six mares in foal to sell, for an average of $384,114 (click here–Instatistics Freshman Covering Sires, Europe only); Kingman had had seven, which have averaged $348,832 so far. Charm Spirit (Invincible Spirit) was fifth to Night of Thunder (Dubawi) and Kingman in the 2014 G1 English 2000 Guineas but was subsequently unbeaten including three Group 1 wins, two against 'olders.' He currently ranks a distant, but respectable third on this list, having had 11 in-foal mares average $126,673. He has only one in-foal mare catalogued at Deauville, but other first-year Al-Thani stallions Olympic Glory (Choisir) and Toronado (High Chaparral) are well represented, as is the Haras du Quesnay's Anodin (Anabaa), a full brother to Goldikova and runner-up to Karakontie (Bernstein)–who himself enter stud at Gainesway in Kentucky for 2016–in the 2014 GI Breeders' Cup Mile at Santa Anita. This was a pretty salty group of milers: Kingman, Charm Spirit, Olympic Glory, and Toronado all went to stud this year; Karakontie and Night of Thunder (Dubawi, goes to Darley Kildangan) are new for 2016.

Our next column will run next Thursday, Dec. 10, so we will have final mixed sale figures including Arqana. Then we will go back to Wednesdays. I know that's late for me to start making my 'Value Picks', which I like doing even though it means straying from the objective to the subjective, so I hope it won't be all be too late to be of some use. Honor Code (A.P. Indy, Lane's End, $40,000) was mine and everyone else's value pick of this year's retiring stallions, which is why they've reportedly had more than 300 applications; so I wasn't much use on him. But the value pick among proven sires under $15,000 might still be available: that's Afleet Alex, still a bargain $12,500 at Gainesway. His 2015 crop of 3-year-olds includes three Grade I winners: Texas Red, Materiality, and Sharla Rae. I'd say that's a mighty strong performance for a $12,500 stallion.

Contact Bill Oppenheim at bopp@erb.com (cc suefinley@thetdn.com).