New Zealand Wool Services buyer, Malcom Ching said that strong New Zealand dollar and a global downturn are keeping wool prices from rising and it may even bring fall.

China, the biggest mid-micron fine wool price driver, is now price conscious and does not want to buy large quantities of New Zealand and Australian wool at its current level.

Ching says Chinese manufacturers started a buying frenzy in 2002-03, paying high prices for wools, but not being able to get rid of product at the other end.

He says Chinese buyers have been telling exporters they are willing to buy wool, but not at its current price.

Mid micron wool peaked at 1000c/kg at the start of the 2002-03 season, when Chinese entered the market in force but fell back to 655c/kg by July. Fine wool prices peaked at 1475c in January 2003 but fell to 1000c/kg in June.

Supply shortages from the Australian drought were the main factors behind the rise, but Ching says prices went far too high and manufacturers are now looking to source cheaper materials in other markets, including lower-priced wools from South America and Russia.

The strong kiwi has also pushed up prices unnecessarily and he says it is getting to the point where the dollar will have to come down against the greenback - China''s favoured trading currency - or New Zealand prices will have to fall.

The dollar hit a five-and-a-half-year high of US60.01c on Monday, July 7, and stayed in the US56c plus range for much of that month, mostly US58-59c.

Wool exporters now hope for a fall to maintain medium and fine wool prices.

However, economists say this is unlikely with some predicting it will stay in the US57c-58c range and others predicting it will eventually reach US60c-65c.

Strong wool prices may fare better than fine and mid-micron wools. J S Brooksbank buyer, Andrew Campbell, says an Australasian building boom, affecting carpet demand, supported stable wool prices last season and looks like continuing until the end of the year.

Carpet mills placing many bulk orders towards the end of last season have started to catch up with a demand that had them working full time.

Campbell says the slowing Australasian economies are yet to make a dent in this building boom - good news for strong woolgrowers.

He says New Zealand and Australia have strong currencies, so the flying kiwi is unlikely to affect strong wool prices too much.