New Zealand lamb wool prices continued to decline at this week's auction amid lacklustre demand during the peak production period.

The price for 30-micron lamb wool dropped to $3.20 a kilogram at yesterday's North Island auction, down from $3.25 per kg last week, according to AgriHQ.

The price for 37-micron crossbred fleece also slipped by 5 cents to $3.40 per kg from the previous comparable auction, AgriHQ said.

New Zealand is at the tail end of its main sheep shearing season which runs from December to early February.

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Lamb wool reached record highs of $7.50 per kg last season, however market conditions are less buoyant this season, as China, New Zealand's largest export market, sits on high levels of finished inventory amid a shrinking manufacturing sector, while demand remains weak in Europe, and the fibre continues to face stiff competition from synthetics.

"The market continues to struggle in this week's auction, where a higher supply is hitting the market," said AgriHQ analyst Sam Laurenson, noting that the currency's strength over the week leading up to the auction had added to the downward pressure.

Buyer activity for the 5,500 bales on offer picked up slightly from last week, with the auction clearance rate improving to 77 per cent, compared with a clearance rate of 64 per cent for 11,819 bales at auctions across the North and South islands last week.