Plunging demand for carpet wool in New Zealand and Australia is worrying New Zealand Wool Services International.
The company is signalling a reduced profit outlook for the year, compared with an earlier forecast.
Managing director Michael Dwyer says the recession in Europe and a slow-down in China, New Zealand's biggest wool market, are significant factors in falling wool prices and demand, as is the strong New Zealand dollar.
But his biggest concern is what's happening in the Australasian market where there has been a serious decline in sales of New Zealand wool - about 60% in the last 12 months.
Mr Dwyer attributes this to a lack of marketing and says it reinforces a need for the International Campaign for Wool to focus more attention on New Zealand wool and the domestic market.