Australian sheep farmers are profiting from record lamb prices as global demand for lamb and mutton grows and sheep exports from Australia, the world's largest lamb supplier, surge.

Analysts say lamb prices are likely to rise further in the coming years as production in New Zealand, Australia's largest lamb export competitor, stagnates.

"We have seen waves of price increases as export demand and our market share grow," said Matt Dalgleish, livestock and meat analyst at consultancy Episode 3.

He said while prices would fluctuate seasonally, "there should be more good days ahead for Australian producers until the underlying pressures of limited supply and strong demand growth change."

Australia exported 702,000 tonnes of lamb, mutton and goat meat last year, worth $3.6 billion, nearly 200,000 tonnes more than in 2019, its previous biggest export year.

Australian trade data shows exports in the first four months of this year were 10% higher than the same period in 2024.

Rising incomes and populations are driving demand for sheepmeat, while high beef prices, especially in the United States, are encouraging a shift to lamb and mutton, Dalglish said.

Helping Australia capitalize on the growth is the ongoing decline in New Zealand's sheep farming industry. The two countries account for more than 80% of global sheepmeat exports, according to MLA.

Australia's sheep population has increased in recent years, allowing farmers to better supply processors, but New Zealand's statistics agency says the country's flock has fallen every year since 2012. New Zealand farmers say this is partly due to pastures being converted to pine forests, which earn carbon credits.

"New Zealand is another major global exporter. Its production is stagnating or shrinking. So any increase in global demand is an opportunity that Australia can seize," said Angus Gidley-Baird, an analyst at Rabobank.