horse racing and the economy

[Dave C]

Pete: First off lets' agree that we're both simplifying things so that we don't bore everyone to death.

I agree with you in that a short term change in feed prices won't have any significant effects on the size of the foal crop. However, there is good reason to believe that changes in feed prices represent a shift in the supply function that is relatively permanent and feed prices won't come back down. Over several years this will affect breeders year end bills, particularly those playing in the low end of the market. it won't affect at all people breeding in the mid to high end of the market.

The other thing to keep in mind is that market prices are largely set by public auction. This is in essence a marginal pricing system where small changes in supply or demand can produce large swings in price. A reduction of 2000 foals per year (within normal variation) over several years could force the market average higher. Alot of the statistical gains would be because the $500 horses aren't at the sales anymore, but that would still be a change in the market.

I would have to agree that you are probably right that fuel prices are probably a greater factor in depressing the broodmare market right now, but that also indicates that breeders facing a higher cost structure are re-evaluating their positions in the market.

In any economic forecasting there are so many variables that ultimately determine where the market that no one can accurately predict what will happen. You make a guess based on what you know and hope nothing goofy happens, kinda like hoping your horse doesn't dwell in the gate.

[Bunty Lawless]

Pete: First off lets' agree that we're both simplifying things so that we don't bore everyone to death.

I agree with you in that a short term change in feed prices won't have any significant effects on the size of the foal crop. However, there is good reason to believe that changes in feed prices represent a shift in the supply function that is relatively permanent and feed prices won't come back down. Over several years this will affect breeders year end bills, particularly those playing in the low end of the market. it won't affect at all people breeding in the mid to high end of the market.

The other thing to keep in mind is that market prices are largely set by public auction. This is in essence a marginal pricing system where small changes in supply or demand can produce large swings in price. A reduction of 2000 foals per year (within normal variation) over several years could force the market average higher. Alot of the statistical gains would be because the $500 horses aren't at the sales anymore, but that would still be a change in the market.

I would have to agree that you are probably right that fuel prices are probably a greater factor in depressing the broodmare market right now, but that also indicates that breeders facing a higher cost structure are re-evaluating their positions in the market.

In any economic forecasting there are so many variables that ultimately determine where the market that no one can accurately predict what will happen. You make a guess based on what you know and hope nothing goofy happens, kinda like hoping your horse doesn't dwell in the gate.

You can influence supply by bucking the trend and using your land to plant hay. Might be better than the stock market right now.