In the coming season the wool industry which is considered as country''s biggest export industries will be affected due to the worst ever drought.

According to an industry report, Australian shorn wool production is forecast to decline 10 per cent in the 2003-04 season because of the drought on the east coast, lower sheep numbers and high sheep and lamb prices.

The forecasts, prepared by Australian Wool Innovation, include a 2 per cent fall in WA wool production.

Sheep shorn numbers for 2003-04 are forecast at 104 million, down 11 per cent on the 2002-03 forecast and six million lower than the previous forecast of 110 million in June.

The subdued conditions compare with the buoyant outlook for the meat industry, with separate reports flagging five years of strong returns for sheep and lamb producers.

AWI said while there had been some good rains since June in New South Wales, the biggest wool producing State, they had been mainly restricted to the southern and western regions.