Australia has dismissed reports that an export shipment of 50,000 sheep stranded in the Gulf might be unloaded in Iraq.
The controversial trade is worth tens of millions to Australia a year
The Australian authorities have been trying to find a new taker for the sheep after they were rejected on health grounds by Saudi Arabia.
But a statement said recent newspaper reports suggesting a deal has been struck with the governing council in Iraq were "incorrect".
"The Australian Government and industry continue to be
involved in a number of sensitive negotiations with a
number of countries and organisations in an endeavour to
arrange a suitable destination for the sheep as soon as
possible," it said.
The sheep, which have been at sea for more than seven weeks, are currently aboard the Dutch-owned Cormo Express, off the coast of the United Arab Emirates.
"The sheep won't dock anywhere till there's a deal done,
because that would not be a good outcome for the sheep,"
Tim Langmead, spokesman for Australian Agriculture Minister Warren Truss was quoted as saying on Saturday.
Australia, the world's largest exporter of livestock, has been offering the animals to other countries free of charge - without success - in an effort to resolve the crisis.
The problem began when Saudi Arabia rejected the sheep, claiming that too many were diseased with "scabby mouth" - a claim disputed by Australia.
Welfare campaigners claim 6,000 animals on board the livestock freighter have now died.
Animal welfare groups have begun an advertising campaign to highlight what they describe as the "living hell" the sheep are enduring.
Industry representatives have said the adverts are outrageous and a waste of money.