Improving sheepmeat and wool market conditions are helping to restore confidence across Australia's sheep industry.

This is according to the latest Sheep Producers Intentions Survey, conducted by Meat and Livestock Australia (MLA) and Australian Wool Innovation.

Responses were gathered from 1,517 sheep producers across Australia.

The survey showed producers are increasingly focused on retaining stock and rebuilding flock numbers.

Confidence improved

MLA senior market information analyst, Emiliano Diaz said the May 2026 survey captured a "notable change" in industry confidence.

“What is particularly significant is that we are seeing confidence improve while many producers are still operating under difficult seasonal conditions,” Diaz said.

“This year, the outlook is fundamentally different.

"Producers are increasingly looking at opportunities to retain stock, rebuild breeding capacity and position themselves for future production.”

Positive outlook

Confidence in sheepmeat remains exceptionally strong, with 86% of producers reporting a positive outlook, the survey showed.

Confidence was consistent across states and flock sizes in Australia, suggesting optimism is being driven by industry-wide conditions rather than isolated regional factors.

Diaz said the breadth of confidence across the sector was particularly encouraging.

“Strong sheepmeat prices and tighter national supply are continuing to provide producers with confidence in the outlook for the industry,” Diaz continued.

“What stands out in this survey is that confidence is not confined to one region or one production system.

"Producers across the country are seeing positive market signals and responding accordingly."

Flock management

The survey also revealed a marked change in flock management intentions.

Last year, producers were considerably more likely to be planning breeding ewe reductions than expansions.

In the latest survey, that trend has reversed, with 37% intending to increase breeding ewe numbers and only 28% expecting to reduce them.

“Breeding ewes are the engine room of the national flock, so intentions around ewe retention provide a strong signal about future industry expectations,” Diaz added.

Wool

One of the survey's most significant findings was the sharp improvement in sentiment towards the wool industry, with net sentiment improving by 80 points year-on-year.

More than half of producers now hold a positive outlook for wool, compared to just 7% reporting a negative view.

Australian Wool Innovation’s head of domestic operations, Scott Carmody said the industry’s mood is on the up again.

“It is a great time to be in the sheep game,” Carmody said.

“An incredible improvement in wool grower sentiment in just a year off the back of much better prices for growers and improved seasonal conditions for many.

“The challenge now is to accelerate the rebuilding of the flock over the next few years while maintaining strong prices paid to growers.”

Challenges

However, Australian producers remain acutely aware of the challenges facing the sector.

Weather and seasonal conditions continue to be the most important factors shaping decision-making, while feed availability, input costs and labour availability remain major concerns.

Producers also identified government policy, global economic uncertainty and geopolitical developments as emerging influences on their businesses.