AUSTRALIA is again riding on the sheep's back as record meat values and a rising wool market inject dollars and enthusiasm into the industry.

Lamb and mutton prices spiked when the markets resumed after the Christmas shutdown and analysts are now going for the record books to see how prices compare.

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The wool market is also delivering joy to producers, with the eastern market indicator closing 16c/kg clean higher at 942c/kg.

Sheep producers who stayed in the industry are being rewarded handsomely, particularly in the prime markets.

The eastern trade indicator closed at 501c/kg carcass weight this week, breaking its previous January record set in 2004 by 24 per cent.

And in a stunning surge, the mutton indicator hit 326c/kg carcass weight - its dearest since 1998.

Lamb finishers are so confident in the short-term future of lamb prices that they are spending up big in the yards for extra numbers.

The national saleyard indicator for restocker lambs closed last week at $75, nearly $20 higher than a year ago.

National Livestock Reporting Service sheep and lamb analyst Rob Millner said prices were "amazing for this time of year".

"We honestly believed that the good rates early this year were due to the supply disruptions at the start of the year but these prices have us scratching our heads," he said.

"There's not many lambs making under 450c/kg and at every sale (reported by the National Livestock Reporting Service) we are seeing some lambs make over 500c/kg.

"It's hard to call what will happen later on but it will be interesting in July."

Bendigo yarded 27,000 sheep and lambs on Monday and Rodwells Bendigo livestock manager Mick Crapper said the lamb market was "as buoyant as ever".

"It's really good now, but I can't see how it will back off much in the future either," he said.

Mr Crapper said it was a "great time" to be a sheep producer if they had stock to sell.

"It is all starting to come home now (with the decreasing sheep flock), and we are seeing that in the wool market, the quantity of wool is not there and so the prices are going up.

"I've always said that any country can produce cattle, but there's only a few like us and New Zealand and South Africa and South America that can do sheep well. And now we are getting paid for it."

While the final day of wool sales last week was cheaper, the market still closed up 16c/kg clean.

Nearly 48,000 bales will be offered at auction this week.