Sheep farmers have until tomorrow to decide whether to back a new wool co-operative.

New Zealand wool prices surged to a 14-year high amid renewed demand for the fibre in the Middle East and Europe.

Farmers' economic confidence improved in the first months of 2010, boosted by sheep and beef prices.

Sheep numbers have continued to fall, dairy cow numbers are rising and grain crops increased markedly, latest agricultural production figures show.

AgResearch says it has several international companies interested in commercially producing its stab and flame-resistant wool fabric.

Rising dairy prices continue to underpin gains in the ANZ Commodity Price Index, which has recorded its seventh straight monthly gain last month.

New Zealand bio-security and food safety authorities moved proactively this morning to announce the discovery of a brain disease that affects sheep.