Australian Dollar at All-Time Low; Could Affect Shuttle Business

The outbreak in Europe of foot and mouth disease and subsequent ban until further notice by Australian authorities of all imported horses from the United Kingdom isn't the only potential setback for the shuttle stallion business. On Tuesday, the value of the Australian dollar slipped to an all-time low versus American currency when it hit $.5028.

The latest value of the Australian dollar reflects an 18% decline in the past year and a 37% slide since March 1997.

The weakness of Australia's currency makes it increasingly difficult to economically justify sending some Northern Hemisphere stallions Down Under. A study of North American stallions shuttling to the Southern Hemisphere, published last year by TBH MarketWatch, an industry newsletter for Thoroughbred investors, revealed lower stud fees in the Southern Hemisphere without regard to the relative strength or weakness of the currencies involved. Of 23 North American stallions that shuttled, their average North American stud fee was US$26,023, while their Australian fees averaged AUS$20,068. That Australian fee now translates to approximately US$10,090, or a 61% drop in price from their American fee. If the Australian dollar remains weak, the impact may be felt primarily on stallions standing for less than AUS$10,000.

While the weak dollar also may slow Australian investment in breeding stock in the Northern Hemisphere, it is expected to have a positive effect on yearling sales, in particular among Asian buyers who may find they can get more for their money.