Sheep farmers look set to share in booming international prices with some saying lambs could be worth up to $90 each this season.
Meat companies had forecast prices of $70-$80 for the coming season, but were now trying to predict the impact of falling lamb numbers and a lower exchange rate.
Silver Fern Farms (SFF) chief executive Keith Cooper said once the market factored in the decline in potential kill and the volatility of the dollar, prices could increase.
"Intuitively, you would have to say it will push the price a bit higher."
Mr Cooper raised the prospect of even higher prices at a meeting of shareholders last week to discuss a merger or partnership with PGG Wrightson.
Alliance Group chief executive Grant Cuff was reluctant to speculate, saying while there were some positive signs, he wanted to see physical evidence from the market that prices were rising further before reviewing his forecasts of $70-$80 a lamb at the peak of the season.
That price would be $15-$20 ahead of last year but still well short of what farmers felt was necessary, given farm input costs rose 9.7% last year.
At $80-$90, farmers would feel their efforts and loyalties were being rewarded.
Meat Industry Action Group chairman John Gregan fears six million fewer lambs could result in a procurement war, with companies forced to pay above market rates to keep their processing plants full.
Mr Gregan said a war would be disastrous for the sector but was inevitable because the meat industry structure was based on getting enough stock to full plants.
"It's the way the industry is structured.
"It's not Alliance's or SFF's fault.
"The very structure of the industry is always going to be based on procurement."
The forecast drop of three million lambs however, followed one of the largest ever South Island kills last season of 18 million lambs and ewes, and returns the kill closer to traditional levels.
Mr Cuff said while it was a significant drop, the industry had processed a similar number of lambs through the same infrastructure.
"It's a big drop from an historically very large kill."
Alliance would not enter a procurement war.
"We have no intention or plans to create that situation" Mr Cuff said.
The Invercargill co-operative had a business plan based on market returns and company improvements and gains.
"We are not building in any aggressive expectations." he said.
Mr Cooper also disagreed that a price war was imminent.
He believed the industry had matured.
Companies needed margins to survive, which would be eroded by paying above schedule prices, and suppliers realised no-one won from a price war, he said.
"Everyone understands no-one makes money out of procurement tensions."
Companies had also factored in a lower lamb kill which had seen SFF reduce sheep meat processing capacity and change its model.
