The financially-fragile wool industry has received some measure of relief from improved prices and demand at the latest wool sales.
But the Meat and Wool Economic Service is still forecasting a hefty drop in prices for the season.
Prices rose across the board at last week's North and South Island auctions.
Mid-micron wool, carpet style fleece and finer lambs' wool rose by up to 3.5%, hoggets' wool by up to 5% and the price of coarser lambs' wool lifted by 4% to7%.
Exporter Wool Services International attributes the improved sale performance to overseas processors' need to have fresh supplies shipped.
There had been a run of weak demand at sales, with exporters also under severe pressure from buyers cancelling orders or reneging on contracts.
Economic Service executive director Rob Davison is predicting fine wool prices to drop by 22% this season and strong wool by 12%, despite a more export friendly exchange rate.
He says wool prices were showing a positive upturn till about August when the credit crisis started to hit and all the financial deals started unwinding.
Mr Davison says with that lack of confidence, despite New Zealand's currency falling, there's been a drop in the purchase fine wool garments and carpets for new homes.
He says there has also been a drop in commercial building restruction and refurbishment of buildings.
Mr Davison says it's hard to predict when wool prices will recover.
However, in compensation, the Economic Service says sheep and beef farmers can expect lamb prices to lift by 38% this year, and beef prices by 11%.
