Auction prices at this week's wool sales have fallen, with the turmoil in Europe prompting buyers to cancel orders.
Prices had been holding up well after a sharp rise in the past year.
However, they fell by 4% at an auction on Thursday and more than 30% of the bales did not sell.
Wool Services marketing executive Malcolm Ching says uncertainty in Europe has led big players like Swedish household retailer Ikea to cut demand for products like carpet.
"They have huge input into sourcing product and influence the price structure all the way back down to the raw material," he says.
Mr Ching says Ikea has cancelled orders for finished carpets from India, and the Indian manufacturers have in turn told New Zealand businesses they no longer require the raw wool they had ordered.