Beef and Lamb New Zealand says significantly improved meat and wool prices will leave sheep and beef farmers in a healthier financial state this year.
However it says the improvement is not enough to allow farmers to start spending up large.
In its mid-season update, Beef and Lamb's Economic Service says it expects tight world supplies to keep sheep meat, beef and wool prices running strong, with wool showing the greatest gains.
It is predicting a 40% improvement in cross-bred wool prices over last season, as woolen goods manufacturers seek to replenish stocks run down during the recession.
Economic Service executive director Rob Davison says sheep and beef farmers are looking at an average before tax profit of more than $67,000 this year.
That would be the highest in six years but still $20,000 below the 2004-5 profit level.