Dairy markets are far too volatile at present for predictions on milk price, according to Kerry Group chief executive Stan McCarthy.

The Kerry boss said that “underlying fundamental demand for high-quality dairy products from Ireland remains very positive”, but he warned that “we are at a vulnerable time”.

Advising farmers to be cautious about expansion, he said that “the next 12 weeks will determine a huge amount in terms of what is going to happen”.

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“Three weeks ago, I would have said you are looking at a price in the mid 20s. Today, that’s not likely to be the case, but that is just too reactionary. If you stand back from the market and look at it from a business perspective, this is a vulnerable time – let’s not make any brave predictions or alarming forecasts as we work our way through the uncertainty of 2015”.

He advised Irish farmers to be very cautious about expansion. “Given the volatility, perhaps the greatest lesson of the past 12 months is to expand as cautiously as you can. Don’t over-expose yourself. The best of companies can get caught by growing too fast – the same can apply to dairy farmers.”

A stable 2015 might be good for everyone, he said. “Anyone can make money in a high-price market,” he said. However, high prices hit demand in some parts of the world as “dairy got too expensive”.

He said that Kerry Group has capacity in place for 20% growth in milk production. Growth this year “could be 5-8% on an annualised basis, but it is very much dependent on price and weather”.

He said that Kerry’s recent launch of their first fixed milk price scheme was “an effort at de-risking and to bring some stability”.

Stan McCarthy’s advice echoes the recent commentary from European dairy giant Arla, who last week declined to provide a milk price forecast for 2015, due to “extreme volatility”.

Meanwhile, on Wednesday, Glanbia’s Siobhan Talbot talked of “stabilisation” in dairy markets and good underlying demand. However, she warned that “we haven’t reflected the current market in our milk price as yet, so you are still going to see some weakness”.

She also referred to work in the past week that would point “to a more positive dynamic for the second half than people had feared”.

She forecast 15% growth in Glanbia’s Irish milk intake this year, with the company’s new Belview plant officially opening next week (Thursday 5 March).