Australia’s sheep supply to tighten in 2026 as flock declines

Australia’s sheep industry is set to enter a lower supply phase in 2026, with the national flock projected to fall 2.7% to 67.1 million head, according to MLA. The decline reflects several years of heavy turnoff and challenging seasonal conditions across key southern regions, which have limited the capacity for flock rebuilding.

Slaughter is expected to drop sharply, with lamb slaughter forecast down 11% to 21.86 million head and mutton slaughter falling 30% to 7.13 million head. Despite this, production will remain relatively resilient, supported by higher carcass weights and productivity gains, with lamb output projected at around 537,000 tons cwt (–10%).

Tighter supply is likely to constrain export volumes, although firm global demand —particularly amid limited supply from New Zealand— should provide underlying market support. Australia’s position as a reliable supplier of high-quality sheepmeat remains a key advantage, even as higher livestock prices and freight costs weigh on competitiveness.

Looking ahead, MLA expects prices to remain relatively stable and above long-term averages, supported by reduced supply. However, 2026 is shaping up as a year of adjustment rather than expansion, with future recovery dependent on seasonal improvement and producer confidence.