The decline in lamb numbers, which the report estimated could be as low as 24 million, could not all be pinned on this year's widespread drought. Capital stock numbers and lambing percentages had reduced.
It also reflected a general downward trend in sheep numbers, BNZ's latest Rural Wrap said.
While a lower lambing percentage was expected, that would also depend on the weather from here on, given the tight winter feed outlook.
There was a lot of variation across regions, with responses ranging from a 20 percentage point reduction to a two percentage point increase on last season.
The weighted results implied an 8.3% point reduction in the national lambing percentage, from last season's 123.3% to 115%. It was suggested the national sheep capital stock might have declined by about 3%.
For beef, the capital stock decline might have been a little larger, possibly just more than 4% off the national herd, the report said.
A larger hit to cattle, compared with sheep, fitted with the fact that a greater share of the country's beef cattle were in the North Island, where the drought was widespread.
The first test of the capital stock estimates would come via Beef and Lamb New Zealand's stock number survey, the results of which were usually released in August.
The first formal assessment of lambing percentage would come from the organisation's lamb crop report, usually released in late November.
The bank was more optimistic that lamb prices would rise over the coming year but the reason was ''not a good one'' - less supply from New Zealand following the drought.
But any gains would be tempered by ongoing economic malaise in Europe and the UK.
Rapidly expanding Chinese demand continued to offer promise but, just because China bought more volume, it did not necessarily translate into significantly higher prices.
Dairy prices were at very high levels, reflecting tight global supply and demand growth.
The bank believed prices had peaked and would head lower during 2013, as supply became less tight, but would remain above pre-drought levels.
At this very early stage for the 2013-14 season, BNZ had pencilled in a $6.15kg ms milk price (from $5.80 for the current season) and 45c share distributable profit forecast. That assumed a ''decent pullback'' in world prices and ongoing strength in the New Zealand dollar.
