Fertilizer prices will be a key in this spring’s battle for acres and, as they did in 2008, have some impact on the carrying capacity of southern pastures that are fertilized as a common practice. The big impact will be on “expected returns over cash costs” for corn, cotton and, to a lesser degree, wheat producers. Corn wins any race to generate revenues. How “expected returns over cash costs” play out for the major crops this spring will drive planting intentions and actual plantings and impact grain markets for 2011 and 2012.

Trade issues. The beef, pork and poultry sectors have seen the impacts that unilateral trade policy decisions by customer countries can have on markets. While there aren’t as many major issues on the table at present and some progress was made in 2010, these factors can come into play at any time over just about any issue.

Weather. The entire situation with grain supplies and demands leaves U.S. ag at perhaps its most vulnerable position in years regarding weather. With projected carryout stocks of 832 million bu. of corn and 165 million bu. of soybeans, a short crop of either in 2011 will carry dire consequences. The last major drought in the U.S. corn belt occurred in 1988 – 22 years ago – and history says we are due for a summer of low rainfall and high temps. Iowa State University’s Elwyn Taylor points out that, based on 800 years’ worth of tree-ring data, the longest period between droughts in what is now Iowa has been 23 years. If we get through this year without a drought, we will be in new territory and bucking 800 years of history.

Global politics. While obviously not a new or unique factor for 2011, it continues to overshadow the world economy. With oil at $90-plus, what would a disruption of supplies mean for the current recovery? The risk is still great.

The U.S. economy. U.S. firms are still trying to figure out how to deal with sweeping new federal laws regarding health care and financial regulation. Just what those huge new initiatives mean for what firms can and can’t do and the costs of doing or not doing them is still unknown and that uncertainty is causing hesitation and slowing the economic recovery.