The wool industry is being described as “in crisis” as overseas buyers fail to collect their contracted consignments from wharves and default on paying.

A sudden trend among Indian and Chinese buyers in particular is causing New Zealand wool producers to stare down the barrel of losses in the tens of millions of dollars.

Some overseas buyers are attempting to strong-arm New Zealand producers to renegotiate contract prices in the light of a much weaker New Zealand dollar.

The dollar has slipped from 67USc to 53USc since many contracts were originally negotiated and overseas buyers know that they can get wool on the spot market for $US1 a kilo less than the price agreed in the contract to purchase.

Westpac economist Doug Steel told NBR that New Zealand wool was fetching $US4.15 a kilo in September. Today it commands $US3, the lowest price in 14 years. He says the speed with which the drop happened is matched only by a sudden drop that took place during the Asian crisis of 1998.

Mr Steel said that usually when the New Zealand dollar goes down the wool price goes up. But this time, the dollar has gone down and so has wool. He said a sudden cessation in the demand for house carpet globally has much to do with the trend.

Industry sources suggest that 20% of woolgrowers are now holding on to their clips in the hope of better prices later.