Australia's sheep flock is expected to be the biggest it has been in 15 years, growing to 78.85 million head in 2023. 

The recovery comes after the national flock fell to 64 million in 2020 after years of intense drought.

In recent years New South Wales and Victoria have been the heavy lifters for increasing flock numbers, but Meat and Livestock Australia senior market information analyst Ripley Atkinson said other states were expected to increase their output.

"This year we are expecting Queensland, South Australia, Tasmania and Western Australia to contribute and grow more substantially," he said.

Mr Atkinson said weather had played a big part in the increase in numbers

"Weather is the key driver of how the markets performed and [seeing] that really strong improvement in numbers," he said.

"It's given those optimal conditions for reproductive performance for females.

While there has been growth within meat and shedding breeds, Mr Atkinson said merino sheep were the biggest contributor to the forecast growth.

"Merino genetics still account for 70 per cent of Australia's breeding ewe flock, so they're the vast majority of where that increase will come from," he said.

Slaughter numbers to grow

As the flock grows in 2023, slaughter and production numbers will also increase, with lamb slaughter expected to reach 22.6 million this year.

While it is off the back of a decrease, Mr Atkinson said slaughter numbers would continue to grow into 2024.

Next year Australia's flock is expected to moderate, with an increase of 1 per cent, or 750,000 head, taking the flock to 79.5 million head.

However, the following year numbers are forecast to fall back to 2023 levels.

Australia is the world's largest exporter of sheepmeat, followed by New Zealand.

Mr Atkinson said a decrease in the New Zealand flock size presented an opportunity for the Australian market to widen the gap between the two countries.

"As New Zealand sheepmeat exports have increasingly shifted away from Europe and towards China, improved opportunities for Australian sheepmeat in European markets may continue," he said.

Sheep replacing cattle?

High cattle prices at the end of the recent drought resulted in a lot of cattle producers shifting to sheep production to keep up cashflow, according to Ray White Rural national livestock manager Paton Fitzsimons.

"Off the back of the drought people just didn't have the financial capacity to get back into cattle," he said.

"They wanted to keep moving ... so they went into dorpers, they went back into merino sheep.

Mr Fitzsimmons said the construction of cluster and exclusion fencing, particularly across western Queensland, had led to the increase.

"Without those fences it simply couldn't have been done," he said.

"They've enabled sheep to go back into areas and to replace cattle in those areas that have been fenced up."