Meat processing plants around the country have stepped up production and most plants are working full weeks and extended hours to meet market commitments.
The processing season started well with the national lamb kill hitting 4.6 million by the end of the December quarter, up 4 per cent on the previous year.
However, a cold, wet January in parts of the country meant lambs were slow to finish and the cumulative lamb kill for four months to the end of January was 6.9 million, down 5.8 per cent on the 7.3m lambs processed for the same period in 2012-13.
With fewer lambs available, meat companies paid a premium for lambs for the Christmas and Easter trade and had space available to process older ewes, spurred on by good demand and strong prices for mutton.
Provisional figures for lamb numbers processed until the end of February were 9.8m, down about 3 per cent on the previous year.
Beef+Lamb NZ chief economist Andrew Burtt said the sharp drop in the number of sheep processed was a result of the effects of drought in 2012-13 and seasonal differences.
However, sheep numbers were expected to remain stable. Numbers may decline slightly, but it was not expected to be dramatic. The national lamb kill had been steady for the past four or five seasons at about 20m, he said.
The Alliance Group's meat processing plants have been working extended hours for the past four weeks to process record volumes of chilled lamb for its key Easter markets in the United Kingdom, Europe and North America.
Chief executive Grant Cuff confirmed the company's sheep and lamb processing plants had been operating at capacity with steady flows of livestock requiring staff to work overtime and Saturday shifts to meet market requirements.
The first half of the season had been encouraging, Mr Cuff said. "The demand has been a little better than we anticipated last year and comes from the diversity of markets, Asia, China and the Middle East all tracking quite well and a little more optimism in the United Kingdom and North America than there was last year."
The Invercargill co-operative was also strengthening its presence in emerging markets such as Brazil and India to diversify its export base. While lamb numbers processed during January were down because of a colder summer, tallies for February made up for the slow start and still gave the company time to process chilled lamb in time for its key Easter trade.
"A late Easter is really helpful in our industry," Mr Cuff said. A good flow of livestock through processing plants and having time to ship them was important for the company because of the high percentage of chilled lamb it put into important northern hemisphere markets. It also helped with price stability. Fairly stable schedule prices since Christmas meant farmers could confidently hold stock longer and take them through to heavier weights.
The company's last Easter shipment left earlier this month and Mr Cuff said he expected balance between demand and supply to be "about spot on".
Meatworkers have had a better start to the season with most plants working full weeks and overtime, no doubt helped by the closure or rationalisation of some sheepmeat chains.
General secretary of the New Zealand Meatworkers' Union, Graham Cooke, said strong demand for mutton in China meant more sheepmeat was being exported in a raw state.