The value of Australia's sheepmeat industry is expected to surpass a new record of $5 billion by the end of the fiscal year.
On top of this, sheepmeat exports are predicted to reach an all time high of $4.4 billion.
This is according to the latest Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) 2021-22 forecast and outlook report released this week, which clearly outlines the rises are supported by the continuation of high domestic prices and rising sheepmeat production.
Global inflation is expected to ease by the middle of 2022 and global incomes are expected to rise.
As a result, lamb prices are forecast to rise by 5 per cent, averaging 934 cents per kg in 2022-23 while mutton prices are expected to average 678c/kg.
But prices could rise more quickly if global inflation remains high, ABARES said, and by 2026-27 the value of the sheepmeat industry is expected to range between $5.6 and $6.1 billion depending on the path of global economic recovery.
According to the report the rising value of Australian sheepmeat exports is being driven by strong sheepmeat exports to the United States.
Driving the exports to the US is meat prices rising faster than general price inflation while domestic sheep production remained relatively low.
Between July and November 2021, exports to the US were 45pc higher than the same time in 2020.
Between 2022-23 and 2026-27, the value of sheepmeat exports is expected to continue rising with 2026-27 forecast to be between $4.6 and $5.1 billion.
ANZ director of Agribusiness Madeleine Swan said although internationally sheepmeat consumption remains far less per capita than beef, poultry or chicken, the United Nations Food and Agriculture Organisation forecasts an increase of sheepmeat consumption in the medium- term.
"Despite a number disruptive factors currently impacting the supply chain, saleyard prices are set to remain relatively strong driven by a strong outlook for export demand," Ms Swan said.
"Both Australian lamb and mutton remain a premium product with ongoing strong demand both domestically and globally."
And as the flock continues its rebuild, more lambs and sheep are available for slaughter than last year.
On the back of this, the quantity of sheepmeat produced in Australia is expected to rise by 5pc to around 690,000 tonnes.
Lamb slaughter is expected to rise by 1pc to 21.0 million head in 2021-22 while sheep slaughter is expected to increase by 11pc to 6 million head.
But whilst all the rises are taking place in Australia, New Zealand's sheepmeat supply is predicted to ease in the short-term.
According to New Zealand's Ministry of Primary Industries, NZ's sheepmeat export volumes is forecast to fall in 2021-22 due to lower production, before falling again in 2022-23.
This is likely to support global demand for Australian sheepmeat in the short-term to 2023-24.
Ms Swan said export demand has been a driving force for strong saleyard prices in Australia for many yeas.
"This is expected to continue as Aussie producers take advantage of their strong competitive position," Ms Swan said.
"Historically, Australian lamb has traded at a discount to European and United Kingdom lamb, but slightly more expensive than NZ lamb.
"A recent strong increase in NZ lamb prices stemming from export demand from the US, China and Europe has seen NZ lamb recently return to par with Australian lamb."
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