WOOL prices fell sharply last week with AWEX's Eastern Market Indicator falling 22c/kg to close 920c/kg clean.
Brokers described the market as softer, exporters said it was a correction, while growers were disappointed.
In US dollars, the EMI's fall was much greater, down US32c/kg to US829c/kg clean.
Growers reacted by passing in 16.4 per cent or 8000 bales. The pass-in rate was particularly higher for Merino fleece lines.
Reasons for the sharp turn-out after two week's rises are very scant.
Elders Wool International, in its weekly report, said it was obvious the previous week's rises couldn't be maintained.
It said the market still had to be aware of the lingering impact of the global financial crisis.
"Generally prices for wool top, yarn and fabric are two to three months behind the greasy wool market and it will take a period of stability for the new level of prices to be passed on," Elders said.
"Medium-micron wools in particular have been rising for the best part of 12 months, and so when the retailer who was knocked around by the global financial crisis suddenly asked for a new quotation and then gets today's price he falls off the his chair again."
With the Australian dollar falling below US88c earlier this week, brokers were hoping that prices will at least stabilise. Evidence of this occurred in closing Sydney sales last week.
While prices in Melbourne fell 4c/kg on Thursday, in Sydney they rose 4c/kg.
That created a situation where many of the price differences between Melbourne and Sydney for the same types and microns were up 20c/kg clean.
Latest test data from AWTA has also confirmed the continuing supply squeeze.
Despite a better-than-expected test throughput for December, the January data indicates the clip for the first seven months of the season was running 6.1 per cent down on the same time last year.
To the end of last month, AWTA had tested 1,243,944 bales - 71,747 bales less than the previous season.
