The long decline in wool output appears to be steadying according to the Australian Wool Production Forecasting Committee - whose latest report is the first in nearly two years not to cut production forecasts.

The decline in production across Australia is entirely due to lower sheep numbers, the group says, and encouragingly points to signs that levels are beginning to stabilise in many states.

Australia is the world's top producer and exporter of wool and its shorn wool production in 2009/10 is expected to be 330m kg. This compares with a final estimate for 2008/09 of 362m kg.

"Key statistics, including season-to-date wool tests and wool receivals, continue to point to a fall in production of around 30m kg for the year," committee chairman Russell Pattinson said.

"While seasonal conditions have been patchy around Australia, some areas have experienced the best conditions in a decade but others are still very dry. The main issue is the number of sheep in Australia."

The committee confirmed its July forecast that wool production in each state would fall in 2009/10 compared with 2008/09, except for Tasmania which is now expected to see a modest 3% rise in production due to better fleece weights.

The committee also now expects that the production of superfine wool will not drop as much as previously expected.

"This is mainly due to poor seasonal conditions in the past six months in the two largest wool producing states of NSW and Western Australia," Mr Pattinson said.