Global AgriTrends analyst Simon Quilty has forecast heavy lamb prices to rise from the current 1095c/kg carcase weight to a peak of 1350c/kg in July to August this year.
Prices are then expected to ease to around 1100c/kg by December 2026, before strengthening again to 1250c/kg by June to July 2027.
A further decline to about 1013c/kg is forecast by December 2027 as processors reduce capacity to limit losses.
Trade lamb prices are expected to follow a similar trajectory, peaking at 1361c/kg CW by July this year, before falling to around 1100c/kg in November.
Prices are then tipped to rebound to 1272c/kg by March 2027.
Looking further ahead, trade lamb prices are forecast to bottom out at 936c/kg in August 2027 before rising to 1094c/kg by June 2028.
Mr Quilty said the outlook was backed by a sustained period of flock liquidation over the past two and a half years, which had tightened supply.
Speaking at the Pasture Agronomy Service conference in Wagga Wagga on March 10, Mr Quilty said Australian processors could expect sheep and lamb numbers to remain constrained for at least the next two years.
Markets have reacted to the collapse of air freight into key Persian Gulf states, with light lamb carcase prices falling by about 20 per cent over the past year, from 1195c/kg to 951c/kg.
In contrast, heavy and trade lamb prices have lifted, creating opportunities for buyers to pivot towards lighter lambs for grain feeding.
The Middle East accounts for 19 per cent of Australia’s lamb exports, predominantly light lamb, and 27 per cent of mutton exports.
Mr Quilty said ongoing geopolitical tensions, particularly involving Iran, had severely disrupted trade, with airfreight volumes into Iran falling by 80 per cent over the past year.
Despite this, recent widespread rainfall across southern Australia had eased pressure on mutton supply, with kill numbers struggling to lift.
Mr Quilty said around 6.5 million sheep were expected to be slaughtered this year, supporting firm mutton prices potentially reaching 850-880c/kg next year, up from around 750c/kg currently.
The Australian Wool Production Forecasting Committee has reported wool production is expected to fall 10.2 per cent to 251.5 million kilograms greasy in 2026, with sheep numbers down 12 per cent to 63 million head.
Mr Quilty described the North American lamb market as “exciting”, with a 30kg carcase valued at up to $16.25/kg.
Rising US demand, driven by protein‑focused diets among Gen Z and ageing baby boomers, is underpinning prices, with America “driving the bus” by taking the most valuable cuts.
He said growing recognition of marbling, particularly in slower‑growing Merino lambs, offered a bright spot for producers amid ongoing challenges in the wool industry.
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