Sheep producers can expect "another year of grief" due to market oversupply before prices pick up significantly in 2025, 2026 and 2027.
That's the message from Global AgriTrends managing director for Australia Simon Quilty, who said oversupply within Australia is the dominant force shaping the current price pressure within the sheepmeat sector.
"There is no correlation right now between supply in Australia and demand in America [Australia's biggest export market for lamb]... there is too much lamb coming forward," he said.
"My expectation is that we're not going to see a peak in the lamb market in Australia until the final quarter of this year, in which we will kill about six million head of lambs... to me that's going to be the peak for not just this year, but for several years to come.
"In fact I wonder whether we will go back to that point ever again... there is still more grief to come, because I think there's more supply to come because of the dry conditions and the expecting lambings we've got in the system."
Mr Quilty said he didn't expect the mutton market to reach its peak until the next September quarter, when he anticipated three million head would be slaughtered.
"We're in liquidation right now when it comes to the sheep flock," he said.
"In 2024 we'll expect lamb production to be down 12pc and mutton production to be down 15pc as the liquidation continues.
"My opinion is that we've been liquidating the sheep flock for almost an entire year, that marginal areas of NSW actually started liquidating at the start of this year as the dry conditions started to become more evident."
Mr Quilty said he would expect there to be further pricing pressure during the final quarter of this year and after that lamb production would start to decline, with fewer joinings.
"You're going to find that there are people continuing to exit that market and in the end it's going to result in much tighter supplies in 2025, 2026 and 2027," he said.
"My expectation is that prices will turn and improve dramatically in those years, but while the conditions remain dry... it's going to be challenging.
"I think by 2027, prices will be double what they are today or more than double."
Mr Quilty said lamb is regarded as a high end product in the USA, and there had been a slowing in the high end of the market, both in Wagyu beef and in lamb.
"We have seen in the last month or so in America that lamb has bottomed and started to improve, so there is so optimistic signs that the US lamb market has stopped falling and that the consumer is now back buying," he said.
"It's not a robust demand, but things have bottomed and they're slightly on the improve, in Wagyu and in lamb."
The Chinese economic crisis is also taking a toll on Australian sheep producers.
Mr Quilty said inventories of beef and sheepmeat within China were the highest they had been in two to three years.
"For beef three times the volume of normal imported volumes are being held as we speak and in terms of sheepmeat it's two to two and a half times the normal import volumes," he said.
"The expectation was that there was going to be this revenge spend after the restrictions were removed and so importers within China and the local domestic market expected there would be this enormous demand.
"Instead we've had the slowing global economy and all these economies like China, Korea and Japan have got one thing in common, they're manufacturing, export-based economies, meaning they need to try and export their way out of these problems to improve their economy.
"In actual fact the latest data is showing things are slowing even further in China as exports per month struggle."
Mr Quilty said 42pc of Australia's mutton exports go to China, making the space very susceptible to fluctuations within the Chinese economy.
"When you've got a slow China market, you have a slow mutton market," he said.
"In terms of lamb it's far more diversified across many, many countries, so the dependence on China is far less. "