Sheep and lamb prices reach record highs and wool moved back to historical high levels not seen for almost 10 years
Sheep breeders have entered a golden age as far as income is concerned, with sheep and lamb prices at record highs and wool prices moved back to historical high price levels not seen since 2019.
And with the nation’s flock close to record lows and production growth set to remain constrained this situation is likely to remain in place for at least the next five years.
Industry experts have confirmed it is unlikely there will be a significant expansion of flock numbers in the short term due to ongoing structural challenges. But for some producers looking to expand there will be market growth opportunities.
And while our local producers are expected to remain the world’s largest exporter of both sheepmeat and wool, the country’s sheep flock has contracted to its second-lowest level in more than 100 years in 2026.
While industry experts are urging producers to consider widespread flock rebuilding there are certainly individual producers looking to grow numbers, but general feedback across the industry suggests the appetite for large-scale rebuilding remains relatively subdued.
With flock numbers expected to remain at relatively low levels for the next five years, future growth is likely to be driven by productivity improvements in genetics, reproductive performance, management practices and technology adoption, rather than by increasing sheep numbers.
While the industry will also need to protect consumer demand through stronger value propositions and improved product quality,” he said.
Numbers show lack of confidence
Backing up the reasons behind dwindling sheep numbers is a newly released research report from Rabobank that confirms our sheep industry has undergone “profound structural change over recent decades”, with flock numbers falling from a peak of 180 million head in 1970 to around 66 million head today.
Current inventory estimates are among the lowest recorded since the early 1900s.
And while there are several factors that continue to limit flock expansion, despite the favourable pricing environment, seasonal uncertainty is a persistent constraint. High restocking costs mean producers are being asked to reinvest at historically elevated prices.
Running more sheep generally requires more labour for activities such as drenching, crutching and shearing. That labour intensity is one of the key reasons there will not be a material increase in flock numbers over the medium term, the report identified.
RaboResearch modelling suggests the sheep breeding flock could increase by around six per cent between 2026 and 2030 under an average seasonal scenario, but overall industry growth is expected to be modest.
Global demand is high
The report does indicate global demand for sheepmeat and wool is expected to remain strong and growing, and local producers, as the world’s largest exporters of both wool and sheepmeat, is well positioned to benefit from this demand growth.
OECD-FAO projections point to global sheepmeat consumption increasing by almost two per cent annually through to 2030, driven primarily by population growth and rising incomes across Africa and Asia.
And as far as our major competitors are concerned, overall global sheepmeat supply is unlikely to keep pace with demand growth, which should continue to support prices and provide a positive outlook for Aussie producers.
Digging into global supply a little deeper, the report notes that global imports of sheepmeat are projected to rise by more than 70,000 tonnes between 2026 and 2031, while key exporting nations – including New Zealand, South Africa and the United Kingdom – are not expected to significantly increase exportable supply.
Just one caution has been raised in the report, the demand outlook for wool was “less certain” than for sheepmeat, but wool’s renewable and sustainability attributes supported its competitive position relative to synthetic fibres.
Tight supply underpins price
Favourable market conditions were likely to support sheep and wool prices in coming years. Whereas in the past higher prices would normally trigger a strong supply response, but in this case, demand outstrips supply.
It is expected lamb prices will remain near current strong levels over the next several years, supported by constrained supply and ongoing demand growth. Even under a strong flock-rebuilding scenario where sheep numbers rise, the report confirmed, prices would be unlikely to fall below today’s levels.
And for wool, limited growth in global supply is expected to support market fundamentals. With major competing suppliers unlikely to generate substantial increases in exportable wool volumes over the next five years.
As a result, our local wool industry faces relatively limited global competition.
Create more value with what you have
The overall census for the sheep industry is to focus on opportunities to extract more value from existing sheep production through increased quality and closer alignment with consumer preferences.
In a market where supply is likely to remain constrained, maintaining consumer demand becomes increasingly important, the report confirmed.
The sheep industry’s opportunity is not simply to produce more, but to strengthen the value proposition of Aussie sheepmeat and wool through quality, and more sustainable practices that consumers value most.
