Antonio Esteve, chief executive Officer at Ecom Cotton Group, a cotton ginner with facilities in Brazil, Paraguay and Mexico, comments on demand, alternative raw materials and the outlook for global production. He spoke yesterday in an interview in Dubai.

On demand:

“The problem that we are having now is the supply shortage has caused prices to rise to ration demand. There is more demand than availability, so prices had to rise to cause people to switch to other fibers or to reduce their consumption of cotton and that was the function of the market. That is why prices have risen and I think that prices have risen sufficiently to get that job done.”

On substitution:

“There’s been a lot of switching to polyester, to viscose and as much as spinners have been able to switch, they have switched. This is a phenomenon that is probably exacerbated in the last two or three months because cotton prices really started rising in October but most of the mills were already covered two or three months forward. So through the end of 2010 it was not a very big impact because prices had risen but it was not in their inventories yet.

“So the real impact to mills is being felt this quarter and now we are getting the rationing kicking in. There’s a limit to how much you can switch. The elasticity to switch will be maximized but it’s limited. Normally you would have a switch of 3 to 5 percent, maybe this year because of the exaggeration it might be 10 percent, but it won’t be more than that.”

On the global production response to higher prices:

“We are going to see the biggest increase in acreage and production. Production will depend on yields, but acreage is definitely going to increase at least 10 percent globally.”