CANBERRA (Reuters) -Australian sheep farmers are cashing in on record-high sheep prices, as rising global demand for lamb and mutton fuels a boom in exports from the world's top sheep meat supplier.

Prices are likely to rise further in the coming years as production in New Zealand, Australia's biggest sheep meat export rival, stagnates, analysts said.

"We've seen waves of higher and higher pricing as export demand and our market share has grown," said Matt Dalgleish, a livestock and meat analyst at consultants Episode 3.

While there will be seasonal price volatility, he said, "until the underlying pressure of limited supply and strong growth in demand changes, there should be more good times ahead for Australian producers."

Australia last year exported 702,000 metric tons of lamb, mutton and goat meat worth $3.6 billion, almost 200,000 tons more than in 2019, previously the biggest export year.

Shipments in the first four months of this year were 10% higher than during the same period in 2024, Australian trade data show.

Processors' need for animals pushed the price of heavy lambs to record highs of nearly A$11 ($7.14) a kilogram last week, up 50% from the same time last year, according to a national price indicator compiled by industry body Meat & Livestock Australia (MLA).

China is the biggest importer of sheep meat. Other major buyers include the United States, Britain, the European Union and the Middle East.

Rising incomes and populations are fuelling demand for sheep meat, and high beef prices, especially in the United States, are encouraging people to switch to lamb and mutton, Dalgleish said.

Helping Australia take advantage of that growth is an ongoing decline in New Zealand's sheep industry. The two countries account for more than 80% of global sheep meat exports, according to MLA.

The number of sheep in Australia grew in recent years, allowing farmers to better supply processors, but New Zealand's flock has shrunk every year since 2012, according to the country's statistics agency - something New Zealand farmers say is partly due to the conversion of grazing land to pine forests that earn carbon credits.

"New Zealand is the other major global exporter," said Angus Gidley-Baird, an analyst at Rabobank. "Its production is stagnating or retracting. So any growth in global demand is Australia's opportunity for the taking."

($1 = 1.5399 Australian dollars)