A global protein shortage and increasing demand for Aussie sheepmeat as well as a forecast of strong seasonal conditions are underpinning a favourable mid-term outlook for the sheepmeat industry.
And as a result, industry analysts have forecast sheep and lamb prices to remain above the long-term averages.
Restocker and trade lambs are seeing consistently strong prices with over 900 cents per kilo for the last two months, albeit a small drop in recent weeks, and restockers are edging closer to the 1000c/kg - which hasn't been seen since March last year.
Last week the Eastern States Trade Lamb Indicator (ESTLI) picked up nine cents over the week after dropping the week prior to rebound back to 900c/kg cwt.
In NSW prices fell across all categories of lamb. Restockers were the hardest hit, dropping 51c, but they remain the most expensive lambs in the country and on Monday they were at 1018c/kg.
And as predicted, new season lambs are coming in strong making up 90pc of all trade lamb throughput, up from 82pc a week ago.
Good quality new season lambs in Victoria were met with firm competition.
Trade lambs gained 24c and restockers lifted 10c while Merino lambs lost 32c.
ANZ's associate director agribusiness research Bryony Callander said at the saleyards, prices continue to be at near record levels due to processor demand remaining strong.
"The fact that this season has varied across different regions has seen a disparity in new lamb conditions," Ms Callander said.
"In areas that have seen cooler and wetter weather, many lambs are still short of slaughter condition, further pushing up the prices paid by processors to ensure adequate supply."
But she said while sheep prices have been generally strong, the major potential challenge in the coming months may be to the processing sector itself.
"As happened in 2020, recent weeks have seen several meat processing plants, particularly in Victoria, impacted by COVID in different ways," she said.
"Some plants have seen new COVID cases among which on its own could well impact processing capacity, and as such, the number of stock processors will purchase.
"In addition, new workplace regulations around COVID, including requiring processors in Victoria to operate at 80pc capacity, could well see a fall in lamb prices than the traditional spring flush reduction at this time of the year."
But looking further ahead, Ms Callander said traditionally, following the end of year fall in lamb prices, they are more than likely to rise again.
"Producers with smaller lambs may need to make decisions on how long they will hold onto stock, taking into account potential feed costs going into summer, as well as condition changes from drier pastures," she said.
Already there are anecdotal reports circulating that producers will be willing to slow turnoff to support firmer prices in the short-term.
Start the day with all the big news in agriculture! Sign up below to receive our daily Farmonline newsletter.
Sign up for our newsletter to stay up to date.