Sheep and lamb prices surge amid tight supply and strong demand

Sheep and lamb markets are entering summer 2025/26 on a high, with strong prices and steady demand signalling continued optimism for the sector as processors navigate ongoing supply challenges into 2026.

While national lamb slaughter is only down around 3 per cent year-on-year, the spring flush fell more than 10 per cent short of 2024 levels.

ANZ Associate Director, Agri Insights, Alanna Barrett, unpacks the latest insights in ANZ’s Summer 2025/26 Agri InFocus Commodity Insights report.

"As the drop-off in new season lamb supply became apparent in early spring, restocker prices jumped to parity with trade and heavy lamb prices and have held firm ever since. 

“Low grain prices and good standing feed in key regions have encouraged producers to add weight rather than turn off early, further tightening supply in what was already forecast to be a constrained year. Processor contracts extending into early January at or above current pricing indicate no expectation of a supply resurgence anytime soon,” said Ms Barrett.

Mutton slaughter has also declined by around 6 per cent year-on-year, reflecting the smaller national flock following record turn-off throughout 2024.

Export demand remains a key driver of confidence. Lamb exports to China are up 19 per cent year-to-date, while Korea has recorded a 22 per cent increase in combined lamb and mutton volumes. However, reduced slaughter has limited overall export growth, with mutton exports to China and the US down 31 per cent and 23 per cent respectively, compared to 2024’s record highs.

Looking ahead, Australia’s flock is forecast to recover only marginally in 2026, rising about 2 per cent from the current MLA estimate of 74.2 million head – the smallest flock since 2021. Structural changes in Western Australia, slow seasonal recovery in South Australia, and competing enterprises are expected to temper rebuilding efforts.

“Strong prices and solid demand are giving producers confidence, but supply constraints and structural changes in key regions will ensure flock recovery is gradual. Producers who have maintained the bulk of their flock through 2025 will be well positioned heading into 2026,” concluded Ms Barrett.

Further insights are available in the 2025/2026 Summer edition of ANZ’s Agri InFocus Commodity Insights report. 

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