The benchmark Eastern States Trade Lamb Indicator rose 7c/kg late last week – its first gain since October 11.
The indicator, which had shed 44c/kg in the past three weeks, is now trading at 343c/kg – down almost 100c/kg since the start of October.
Experts blamed that decline on a spring surge of stock flooding saleyards.
Last Monday's Bendigo market was up to $5 dearer for heavy lambs as numbers dipped at the centre for the second week.
Saleyards monitored by the National Livestock Reporting Services showed smaller total yardings in all states last week with NSW lamb numbers down 10% alone.
Victoria's offering of 51,786 lambs was back only slightly on the previous week but Bendigo's market on Monday was down 3000 after falling 9000 the week before.
Producers flooded lamb markets last month with statistics from the NLRS showing lamb yardings were up 30% in Victoria alone.
But lamb rates have lifted in the past week as producers hold back.
Sheepmeat Council of Australia chief executive Ron Cullen said processors had "over-corrected", something the industry had been expecting on the back of high rates paid last year.
"We suspected we (producers) would get a kick and it seems processors have over-corrected," he said.
"The market is heading back the right way now but the 650c/kg paid in March 2011 has stung the industry enormously."
But the council remains buoyant about the long-term future for lamb.
"We are still bullish about the market in the next five to 10 years," Cullen said.
"We believe sheepmeat will continue to be in demand and Australia is one of the few countries where numbers are growing."
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