Going Once, Going Twice…SOLD!

An advantage of selling online through AuctionsPlus is the multiple transaction points at which a line of livestock can change ownership – be it before the auction at the vendors nominated “buy now” price, during the set auction once the selected reserve price is met, or after auction via negotiation.

Ultimately, for AuctionsPlus, it is the final clearance rate for each sale that best indicates the sentiment within the market, given the control sellers have in setting reserves, then the willingness of buyers to bid and compete for the listed lines.

Initially, sellers have the flexibility to test the market, by setting the reserve price they feel is appropriate, and then if needed, readjust prices to stimulate a transaction. Indeed, if the reserve price and buyers’ expectations does not reach a common level, then the line will be passed in, and clearance rates at auction will decline. These conditions are most prevalent when the market starts to retreat from a run of record-high prices, resulting in a disparity between seller expectations and buyer willingness.

The AMI (AuctionsPlus Market Insights) team have reviewed data for clearance rates and sale transaction points to understand how the current market is faring. By pinpointing at which point lots are selling, there is insight into the balance between buyer willingness and seller expectations.

A good indication into market performance is the percentage of sales that occur post-sale. Post-sale negotiations occur between agents and buyers in order to clear lots that pass in at auction. If there is a high percentage of lots selling after the sale, then an assessment can be made that there is a disparity between sellers with too high reserves and buyers unwilling to pay more.

In 2019, there was a high percentage of lots being sold post auction – 24% of total sales happened after the auction closed. This was due in large part to the lack of demand brought upon by years of relentless drought and feed and water limitations. In 2020, the widespread rainfall brought with it a sudden surge in demand for a limited number of stock, promoting numerous buyers in the market and therefore a higher clearance rate at auction end, increasing to 72%, up from only 53% in 2019.

The rapidly rising market, driven by rebuilding intentions and grass fever meant that it was very much a seller’s environment into 2021, with buyers forced to meet the ever-increasing prices to secure stock. As the market has now been on a 15-month run of historically high prices, the clearance rates for each sale have started to show signs of easing, with increased post-auction movements - a possible signal that the market has topped. Indeed, while the prices at play are still extremely high, online activity is starting to see a consistent rise in agents having to negotiate, with an increasing number of buyers pushing back on paying record prices, while sellers stand firm with their expectations.

As per AuctionsPlus’ terms, stock that had no bids or pass in at auction may be reoffered into a subsequent auction. The listing fee includes ONE free reoffer under the following guidelines:

• Cattle may be reoffered in one of the next 3 weekly auctions.

• Lambs must be reoffered within 7 days of the original auction.

• Sheep must be reoffered within 14 days of the original auction.