Lamb is forecast to hit $90 by 2012.
But if predictions are accurate, it may be too little, too late to satisfy farmers.
There is talk lamb could be worth $75 a head in the coming season, but cash-starved farmers have been saying they need $100 a head now, not in four years time.
The Ministry of Agriculture and Forestry situation and outlook for New Zealand agriculture and forestry report, released this week, was bullish about prospects for lamb, picking prices to improve by close to $1 a kilogram by 2012.
That would lift the price to about $75, excluding pelt and by-products, which would add another $15 to $20.
Silver Fern Farms has already publicly said lamb prices next season could be $20 a head higher than last, taking them to about $75.
Alliance will announce its forecasts at meetings with shareholders starting in Milton on Monday.
Sheep numbers fell 4% to June 30 2007, but drought and a greater exodus of farmers from the industry could see numbers fall a further 10% in the year to June 30 2008 once the numbers are finalised.
Maf also warned that lamb consumption in the European Union was not growing, but prices were lower in alternative markets where demand was increasing.
In the year to March 31, the only key markets where export volumes of lamb grew were China and Saudi Arabia.
"Both these countries have seen increasing import volumes and are emerging markets for New Zealand, especially for lower-value cuts."
The outlook for crossbred wool remained uncertain with current prices, adjusted for inflation, now just 6.2% of the peak price reached during the Korean War.
Growth and demand from China should underpin some price and volume stability, helped by lower supply from New Zealand and other crossbred wool-producing countries.
Prices for fine and mid-micron wool were expected to ease as the Australian wool industry recovered from drought.
Since January, Australian apparel wool prices have fallen assisted by an unfavourable exchange rate but also negative publicity over mulesing.
New Zealand beef exports should benefit from a lower cow kill in our main market, the United States, and an easing exchange rate.
Maf has forecast demand for manufacturing beef to rise as cash-strapped consumers shift demand from prime to lower-value cuts.
Supplies of manufactured beef fell due to reduced imports from drought-hit New Zealand and Australia, and South America diverting supplies.
Exporters were moving their focus away from North America, with Indonesia doubling its beef imports since 2006, the market this year worth $88 million.
Maf expected the dairy payout to drop to $6.90 a kilogram milk solids in 2009 and then average about $6, still higher than the average between 2002 and 2007.
Slowing international growth would temper demand for dairy products, but cash-rich oil-producing nations have become key buyers, with Opec countries now taking 21% by value of our dairy exports up from 17% a year earlier.
Dairy production was expected to increase around the world with the EU lifting quotas 2%, recovery from drought in Australia and better yields per cow in the United States.
The North Island drought resulted in a 3.5% drop in New Zealand milk production, contrary to forecasts of a 2% to 3% increase.
Maf forecasts production to grow 3% a year on the back of greater cow numbers and improved yield, but the number of individual herds was expected to fall.
Deer farmers were expected to see their best venison returns in six years after two successive years of rising prices.
Slaughter rates were down and supplies low, while prices in Europe were expected to remain strong.
But velvet prices in the key South Korean market were low.
The high exchange rate and shipping costs saw forestry receipts fall 4.3% in the past financial year, despite a 2.6% increase in volume.
Maf expected the industry to turn around on the back of growing demand from China and India and a falling exchange rate.
Log prices have been steady for the past 18 months and remained positive due to the imposition of taxes on Russian log exports and growing demand.
The international housing slump has impacted on demand for timber and panels which could struggle until next year, but demand for pulp and paper remained strong.
Apple and pear prices and volumes were both up, but bad weather was expected to cause a 9% decrease in the volume of apples and pears exported next season.
Prices in the coming years were expected to be affected by growing volumes from competing countries with the price per carton expected to rise from $22.70 this year to $26.50 in 2012.