Bloodstock opinion: Clearance Rates and Reading Between the Lines There are few indicators in bloodstock sales that are quoted as quickly, confidently and loudly as the clearance rate. Within minutes of a sales session finishing, it becomes the headline indicator of how successful trade was. Strong or weak, positive or worrying, this industry judges a sale on a single percentage. Yet, as with most headlines, the reality has many layers. More Than a Simple Percentage Mathematically, it is a straightforward calculation. However, this figure is constructed by a huge range of human decisions. Particularly those made by vendors. A clearance rate of over 85% at major sales is usually interpreted as a sign of strong demand. But that warrants closer scrutiny. The clearance rate is not solely a measure of buyer strength. It is a reflection of vendor behaviour. If vendors feel the market is challenging they tend to: - Set more realistic reserves - Withdraw horses unlikely to meet expectations - Show greater willingness to sell Resulting in a clearance rate that appears relatively strong even when demand is weak. In contrast, in a strong market, vendors will set ambitious reserves which can suppress clearance rates despite resilient demand. A Divided Marketplace Recent sales have revealed the increasingly large split in the bloodstock market. At the top level, demand has stayed strong and consistent. Very much driven by the big boys like Coolmore and Godolphin. Those well bred, well made individuals continue to sell with ease and achieve premium figures. Below that tier, the picture isn’t pretty. The middle market which has long been the backbone of many sessions has struggled to keep a consistent level of fluidity. Animals in this bracket are far more sensitive to those shifts in buyer confidence and it is here that the clearance rates can strongly mask underlying pressure When the Percentage Slips A low clearance rate is often a more meaningful warning signal than a high one is of strength. It can elude to: - Resistance to vendor expectations - Oversupply - Selectivity among buyers Context is critical however. Early sessions of ‘select sales’ often produce a lower clearance rate as vendors tend to test the limit of the market and then adjust later in the week. To gain the real health of a sale, clearance rates must be taken onboard with other key indicators: - The median price, which often gives the most accurate reflection of the market’s core - The average, highlighting overall spending power - The performance of the top end - The volume and quality of ‘reserve not met’ horses In my opinion this combination of figures gives a much more realistic picture. Perspective Over Perception Clearance rates are a valuable tool to assess how easily horses are changing hands but they are not an absolute guide to market strength. They sit at the crossroads of expectation and reality which are shaped by buyer demand and vendor ambition. In bloodstock, confidence plays a crucial role and clearance rates will always demand attention. Lets not forget that the true value isn’t in the number itself but in the layers behind it. For purchasers, breeders and vendors, understanding what is behind that percentage is where reality sits.
