SHEEP producers could be in for their best year yet according to predictions made at a Meat & Livestock Australia forum in Melbourne today.

A number of factors – including a small national sheep flock, a desire for producers to retain ewes and burgeoning export demand – will see sheepmeat exports volumes lower but prices higher for the remainder of 2017.

MLA corporate chef Sam Burke with an Asian inspired dish using lamb shoulder.

And with sky-rocketing wool prices, the industry is looking the best it has for years according to MLA chief analyst Ben Thomas.

Mr Thomas told a group of about 100 producers, processors and industry representatives attending MLA’s Global Market Outlook forum for sheepmeat that there were “pretty good reasons to believe that this will be our strongest year yet for the sheep industry.”

“You look at all commodities –  lamb, mutton and wool – and there has never been a time when all three have been so high,” Mr Thomas said.

“It is more enticing that ever to retain ewes and build up the flock.

“So after we see production drop this year slightly, we are expecting these market signals to lead to a recovery in lamb production next year.”

The high prices and the subsequent impetus for producers to hold onto ewes would mean a supply drop this year.

Lamb production is predicted to fall four percent compared to the record production in 2016.

“We are anticipating particularly tight supply of lamb and mutton in 2017,” Mr Thomas said.

“But this will be the first year on year production drop for several years.”

The fall in lamb production in New Zealand was also positive news for the Australian industry, as NZ is a major competitor on the export scene.

This added confidence to predictions prices would remain strong, Mr Thomas said.

Lamb exports last year were valued at $1.8 billion and 41pc of the lamb exported was sent as chilled product.

And while MLA is predicting a swing back to higher production on the back of the high commodity prices, others were more cautious.

Sheepmeat Council of Australia president Jeff Murray said the lift in wool prices would have an influence on producers’ decisions as the lower rates had been holding the industry back.

“I think what will really stem the expansion of a sheep flock is the labour issue,” Mr Murray said.

“You go into a shearing shed and you don’t see a shearer under 50. We lost the younger ones to the mining industry and they won’t be coming back.”

He does see a swing back to sheep, but a more gradual move rather than the lift to 73 million head by 2020 that MLA predicts.

“The biggest influence I think will be how grain prices track, and that will influence whether farmers turn back to sheep or not,” Mr Murray said.

Former SCA president Kate Joseph said strong returns for cattle would also be a factor in whether producers turned back to sheep.

• More reports out of MLA’s Global markets Forum in Melbourne tomorrow