Sheep and lamb throughput at saleyards is up by 25 per cent, when compared with this time last year, after a price correction and substantial summer rainfall gave producers an early opportunity to sell stock.
With sheep producers taking advantage of price improvements, it has also boosted the five-year average throughput by 65pc and Episode 3 market analyst Matt Dalgleish said it was a "good sign" going forward.
"The improved prices definitely contributed to numbers coming forward," he said.
"Many producers probably felt it might be a good time to offload since returns are at sensible levels.
"With higher supply and prices going up, it means demand is going up."
The market has also responded to the unexpected rainfall across most parts of the country, according to Mr Dalgleish, after the forecasted dry spell at the end of last year failed to hit hard.
"Sheep and lamb were definitely undervalued in the lows of last year and, when the dry conditions were eased, it gave many the opportunity to not turn off as many stock at the end of last year," he said.
The returns for trade lambs have increased in a small period of time and helped to stabilise the market.
"Really strong off-shore demand for product and recovered domestic confidence has inspired to support pricing," he said.
Charles Stewart & Co livestock agent Grant Daniel, Ballarat, said the Central Victorian Livestock Exchange had experienced an influx in sheep numbers in recent weeks.
"People have hung onto their sheep because they haven't been worth a lot and people haven't had to sell them because of the feed about, but in the last month they've doubled in price," he said.
"Restockers have only just started buying sheep in the last three weeks and processors are starting to realise they have to start paying a reasonable price or else farmers will turn to things like cropping."
Nutrien Savin Livestock Marketing director Sam Savin, Hamilton, said seasonal conditions in western Victoria were expected to dry off in the coming weeks.
"Anyone who is lightly stocked has a lot of feed, and those who are heavily stocked don't have much feed," he said.
"Through the merchandise section of our business, we're seeing a lot of self feeders being bought so a lot of farmers are feeding on their lambs.
"It isn't uncommon for this time of year, but in the last few years there hasn't been the margin to feed them on, but if farmers are breeding their lambs and not buying them in, they're just value adding."