New Zealand lamb wool prices fell as Chinese buyers of the fibre favoured the Australian market as a decline in the Aussie dollar made that country's prices more competitive.

The price for clean lamb wool slipped 1.6 percent to $6.35 per kilogram at auction in the North Island yesterday from the previous week's South Island auction, according to AgriHQ. The price for clean 35-micron wool, a benchmark for crossbred wool used for carpets and accounting for the majority of New Zealand's production, edged up 1 percent to $5.10/kg.

New Zealand lamb wool prices last month touched $6.65/kg, the highest in more than four years, stoked by increased demand from China and as a decline in the New Zealand dollar against the greenback made the export fibre more competitive. However, the Aussie dollar's recent sharp decline, driven by a slump in iron ore prices, has lured export buyers to the cheaper Australian fibre.

"Lamb wool slipped as Chinese buyers were likely to have favoured buying in Australia this week as the Australian dollar is softer," said AgriHQ agriculture analyst Ivan Luketina.

Chinese demand for lamb wool saw the volume of New Zealand wool exported to China rise to its highest level in 23 months in February. Over the first two months of this year, three quarters of New Zealand's exports of mid-micron wool, which includes lamb wool, went to China, the highest proportion of mid-micron wool exported to China since 2009, Luketina said.

Some 7,927 bales of wool were offered at auction yesterday, the smallest offering this year as New Zealand comes off its seasonal peak, following the end of its main shearing season from December to early February. Auctions will now alternate between the North and South islands each week. About 93 percent of the wool offered at auction was cleared yesterday.