In the August crop report the USDA pegged this year's corn crop at 12.76 billion bushels versus last year's 12.1 billion and the soybean crop at 3.2 billion bushels versus last year's 2.96 billion — a new record high.

While the Mid-south has been faced with some very dry conditions this summer resulting in substantial yield losses in some cases, increases in production in key states like Nebraska and Iowa are more than offsetting losses elsewhere around the United States.

The good news long-term for corn and soybean producers, however, is demand is starting to pick back up even in light of the weakening U.S. economy.

Corn usage for ethanol this year is pegged at 4.2 billion bushels versus last year's 3.65 billion. We believe that number will continue to grow modestly for the next two or three years. Ethanol plants that are buying and selling on the spot market are making pretty good profits. It's only the ethanol plants that put corn at much higher price levels that are still operating at a loss.

The industry as a whole will mature and do better long-term with reasonable profit margins such as are occurring right now rather than the roller coaster of profits and losses experienced two to three years ago.

For those of you who are in the middle of harvest now or in some cases have just completed harvest, good export demand, many unfilled barges and a smaller-than-expected crop in the South have resulted in a very strong basis for early harvest delivery.

Consequently, even though futures prices have dropped substantially in both corn and soybeans, the movement down in the cash market has been much less severe.

In premium markets like this it rarely if ever pays to store grain — the market says it wants your grain now and because of the premium you should let the market have it.

Over the longer term, almost all commodities are in deflationary trends. I think it'll be difficult for corn prices to average nationally much above $3.75. That means for producers in the Mid-South, an average price of $4.00 or slightly above. Any selling opportunities above that level should be taken advantage of.

In the soybean market, the national average for this coming year will not likely hit $10. $9.50 will be more on target and thus any opportunities you have to sell beans above $10 you will likely be better off having the cash than the soybeans.

The bottom line: Even though we are not staring at $14 soybeans or $7 corn again this year, fertilizer prices have dropped more substantially than grain prices. The profitability of farming in the next year will be as good as or better for most producers than what occurred last year. The reality is, even last year, the amount of soybeans sold above $14 and corn sold above $7 would probably fit in a pickup truck.