If you have done a double-take at the price of lamb in the shops recently it is because Australian sheep prices have skyrocketed into uncharted territory.

Key points: Three years of drought have caused the price of lamb to skyrocket to a national record price of $354.20 per head

Three years of drought have caused the price of lamb to skyrocket to a national record price of $354.20 per head With butchers selling lamb for $19/kg, a family roast can cost up to $60

With butchers selling lamb for $19/kg, a family roast can cost up to $60 Mutton is also at a record price, with 95 per cent of Australian mutton exported — mainly to China

Lamb and mutton have never been more expensive and there's no end in sight to the high prices.

Almost three years of drought have diminished the national flock by millions.

Short supply means intense competition at the saleyards to meet the demands of hungry overseas markets for lamb and mutton.

For domestic customers it means the Sunday roast is becoming a rarity.

Tallangatta butcher Greg Cavanagh says it's hard to sell lamb at these prices. ( ABC Landline: Tim Lee )

Retail and wholesale butcher Greg Cavanagh from Tallangatta in north-east Victoria said local butchers were just not selling lamb.

"We know butcher shops that are selling legs of lamb for $19 a kilo, so when your Sunday roast is $50 or $60 not many people are going to do that," he said.

At Australia's largest sheep saleyards in Wagga Wagga, NSW, there's been an unprecedented market.

Producers are trucking in livestock from as far away as Broken Hill and Orange to take advantage of the boom prices.

A lamb auction in Wagga Wagga brings smiles to the faces of producers, who have done it tough in the drought. ( ABC Landline: Tim Lee )

Livestock auctioneer Peter Cabot said such numbers were uncommon for this time of the year.

"We've yarded more than 50,000 [weekly] for the past six weeks here," Mr Cabot said.

Lamb prices always peak in winter because of scarcer supply but this year's sustained surge has surprised everyone.

"It's at the absolute height that it's ever been," Mr Cabot said.

He is well qualified to make that observation. On June 24, he sold a pen of heavyweight lambs at Wagga Wagga for an Australian record price of $354.20 per head.

The following day at Ballarat in Western Victoria, a pen of sheep made $296 a head, setting a national record for mutton.

For lamb and sheep producers who still have stock to sell the big prices could not be more timely.

Most producers have endured a long, difficult dry spell with many hand feeding with grain for months.

"If you're to compare this year to last year, we reached $300 somewhere in that first week in August before it took off," Wagga Wagga livestock agent Isaac Hill said.

"So we're already at that record of 350 something dollars."

Mick Fitzsimmons from Junee Prime Lamb says around 80 per cent of the lamb he buys are exported. ( ABC Landline: Tim Lee )

While prime lamb is currently the hottest ticket in agriculture the high prices mean very slim margins for processors.

"The lamb market has never been as hot and neither has the mutton market," Mick Fitzsimmons, from Junee Prime Lamb, said.

"We're seeing levels we've never seen before and trying to deal with it."

Junee Prime Lamb exports more than 80 per cent of the lambs it processes.

On the plus side the weakening Australian dollar in recent months has helped exports, so too the seemingly insatiable appetite for Australian lamb in valuable, emerging markets such as the United States.

Ninety five per cent of Australian mutton is exported, and China takes the lion's share.

This year it's on track to account for 35 per cent of exports. Recently Junee Prime Lamb also shipped to new markets in Korea and Singapore.

The demand for Australian sheepmeat is proof of the growing global demand for red meat.

Just released Meat and Livestock Australia figures show a six-fold increase in exports in the past 20 years.

This year Australian lamb and mutton exports, excluding the live trade, are predicted be worth $3.9 billion.

That's more than the dairy industry and the combined value of horticulture.

At home, supermarket giant Coles has set a new benchmark price contract of $10/kg for producers for new season lamb to ensure supply.

No wonder they're smiling: the Mooney family set the record price for lambs. ( ABC Landline: Tim Lee )

Relief for producers during drought

While customers might be thinking twice about cooking their favourite lamb dish, producers like Garry Anderson of Pulletop, south of Wagga, are enjoying the record returns.

"Last week we got $315 a head," Mr Anderson said.

"That's the best price we ever had. All smiles, yeah."

For Joe Mooney, who set the national record price for his 11-month-old Dorset-Suffolk cross lambs, it had been a landmark year.

"To get an Australian record any time is great," Mr Mooney said.

"I won't forget it. We got a big kick out of it."