Up to 900,000 extra lambs could be slaughtered this season compared with last year, heaping pressure on already low farmgate prices.
AHDB’s half-year outlook puts this year’s lamb crop as possibly the biggest in a decade.
Slaughterings could total 13.7 million head in 2015 – about 7% higher than the year before.
Carcass weights are expected to hold up, which means annual sheepmeat production could jump 6% to 316,000t.
High lamb supplies have been a key factor in this year’s heavy farmgate price drop, along with a weak euro, poor skin values and imports from New Zealand.
AHDB market specialist manager Stephen Howarth said imports and exports were likely to be lower than the previous year, making domestic supply the main driver of availability.
He said the other factors affecting prices were likely to change markedly, so prices would remain under pressure.
“The extent of price falls will depend on how demand responds to the increased supplies both domestically and on export markets,” Mr Howarth said.
“However, with consumer confidence still relatively weak, stimulating extra demand for sheepmeat won’t be easy.”
Cattle supplies will see the reverse situation, with AHDB forecasting lower output in both the UK and Ireland.
Prime cattle numbers are expected to fall to 1.9 million head, with production slipping 2% on the year at 860,000t.
Supplies should be a little more plentiful in 2016 and 2017, as more young cattle are currently on the ground.
Imports from Ireland – the UK’s biggest foreign beef supplier – will still be down on 2014, though the strength of sterling has pulled up previous estimates.
British beef exports are still expected to be down on last year’s levels, before rising again in 2016.
AHDB senior analyst Debbie Butcher said the tight supplies could support the market in the medium term. But she said much would depend on retail sales.
“There is the possibility that growth in disposable income could lead to increased consumer confidence and spending, which may offer better prospects for beef sales for the rest of this year and next,” Ms Butcher said.