Data showing the heights lamb slaughter reached in 2023 was a key factor that inspired a rejig of Meat & Livestock Australia's predictions for 2024.
The recently released MLA flock projections feature significantly revised slaughter figures, now estimating lamb slaughter 26.1 million in 2024, a jump of 4.8pc or 1.2 million head from 2023, making 2024 the largest slaughter year on record.
However the July projections had only tipped lamb slaughter of 22.4 million for 2024.
July projections tipped that mutton slaughter would reach 8.7 million head in 2024, then climbing to 9.82 million head by 2025.
But the new projections say that mutton slaughter will reach 10.1 million in 2024 before dropping back to 9.3 million in 2025.
The projections also estimate that the flock will ease to 76.5 million in 2024, but in the July projections, 79.22 million was the anticipated size.
MLA market information manager Stephen Bignell said the figures had been revised to take into account the Australian Bureau of Statistics data highlighting last year's record production.
"I don't think anyone foresaw breaking the previous record by 10pc... we had our figures sort of historically in line with some of the higher slaughters previously," he said.
"The fact that last year that we sort of leveled up into that 25 million head, we went back and looked at the ABS data and then obviously have aligned the lamb slaughter with where the rate is for the first two months of this year.
"So that 26.1 million is definitely doable and we've seen a bigger lamb cohort than what we had last year, which is getting sent to slaughter this year.
"The beauty of the projections being updated every six months is if the lamb slaughter looks like being smaller this year, maybe the back end of this year slaughter might come down from a lamb perspective and might not be as high as 26.1 million, but at this moment the size of the lamb cohort encourages those figures that we see."
Mr Bignell said MLA had also factored in the draft results from their Sheep Producer Intentions Survey in reshaping the flock projections.
The MLA projections forecast that producer sentiment will continue to rise this year, leading to an upward price trajectory between now and June as better seasonal forecasts and increased processing capacity impact the market.
Based on the current market prices, analysts are predicting the national heavy lamb indicator will rise to 763c, with upper estimates even suggesting it could go as high as 877c.
Trade lamb is tipped to reach 751c, with an upper price limit of 854c.
"We know US beef production will be down this year so when we look at the total global protein there will definitely be an opportunity there for that extra lamb coming online," Mr Bignell said.
The MLA flock projections differ significantly from the freshly released ABARES outlook, which puts the 2024 flock at 71.4 million and from the forecast by Global AgriTrends industry analyst Simon Quilty, who has a 2024 flock size of 66 million.
Mr Quilty said he believes the MLA flock size is overstated, leading to overstated slaughter numbers.
"My forecast on lamb kill has numbers falling by greater than five million head over the next two years, with this year's kill at 23.5 million, next year at 20 million and 2026 at 19.5 million head," he said.
"The critical difference in our views is that heavy liquidation has occurred for the last year, leading to a smaller flock size; this will likely continue until next year, producing smaller mutton and lamb kills and higher prices."
Episode 3 market analyst Matt Dalgleish said a tighter flock and strong off-shore demand should help support pricing longer term.
"If there's difficulty in the processing side, if there's too much turnoff at the wrong time for processors to handle, that can have a price impact so we've got to be careful that it's relatively continuous and that the turnoff is kind of not bunched into one particular time frame in the year," he said.
"If they're turning off too many at the one time, that can cause issues with the supply chain given that there's still some issues around labour and capacity but the outlook for demand is pretty robust."