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Prices on corn, soy beans and other commodities had been pretty good, but have dropped more than half because of the national credit crisis.

Corn has gone from a high of $7per bushel to $3.15, and soybeans from $14 per bushel to $7.60-$7.70 as of last Friday morning.

Dennis Philpot, grain merchant for Michigan Agricultural Commodities in Marlette, said commodity prices are now indirectly tied to stock prices on the big board.

He explained Wall Street traders are selling their commodity positions to get cash after the financials crashed. Typically the traders only buy a small amount of commodity positions, which gives them the opportunity to buy commodities in the future. The traders do not buy the actual commodities.

"Wall Street people like it because if they need to sell out they can get cash right away," Philpot stated.

What are farmers doing in the facing of drastic declines in crop prices?

"The majority are holding. They bring it to the elevators or keep it at home in the bins. We make piles here and throw tarps over it. You get a certain amount of loss, but your gain for holding is much larger than that. They'll put it in sheds and leave the equipment out," he stated.

Will farmers then risk the theft of their equipment by scrap metal thieves?

Philpot said scrap metal prices have suffered in the credit crunch too, and are down about two thirds.

"Agriculture always was a high stakes game, but the stakes have changed along with the investments... As they look at the potential gains and losses it is a lot different than two or three years ago because there is more money on the table," stated Sanilac County MSU Extension Director Martin Nagelkirk.

He said farmers used to think it was a lot when commodity prices swung 5%.

"Now they go up 50%, 100% (and then drop 50%). And costs are up 200% and 300%. I haven't ever seen this much shift," Nagelkirk said.

Farmers can pre-buy supplies now, but that means putting as much as all the money down up front Deciding on their crop mix and purchasing supplies such as fertilizer and seeds will be very challenging for farmers this winter, he added.

At least the credit crunch isn't having as much of an impact on the availability of ag credit.

"The rates will be higher with the credit crunch, but money is still available for farm lending," said Sid Matson, vice president of Eastern Michigan Bank. "Ag banks didn't participate in the high risk mortgage lending. In the coming year they might be required to do more on cash flow projections with the drop in prices and high input costs (to qualify for loans)."

Farmers have to finish planting wheat now, but they can wait until this winter to decide how many acres to commit to soy beans, corn and other crops.

Wheat doesn't use as much fertilizer per acre as other crops, Nagelkirk said, but it still uses quite a bit.

"The projections are for corn and sugar beets (acreage) to grow for next year," he noted.

"Soy beans are light fertilizer users, of the major crops they are definitely the least costly to grow. We may see another increase in acreage," Nagelkirk stated.

On the plus side, farmers are having a successful harvest.

Corn
"We have high expectations, some say the crop may break records," said Nagelkirk. "It is an exceptional crop. Largely due to timely planting and also timely rainfall."
"The first of September it was not very mature, but it was helpful with the heat we had. Now it is mature and the crop is made. The only thing that would get in the way is severe weather, which is unusual. There is not a lot of risk at this point," he added.

Soy beans
"It is currently being harvested and yields are expected to be good... Overall yields and quality will be good to very good," Nagelkirk noted.

Dry beans
He said farmers are just finishing the dry bean harvest.
"The harvest was delayed because of late planting... The temperature was a little bit behind the last couple years, and there were somewhat cooler," Nagelkirk stated.
However, the crop is in pretty good shape.

Wheat
The winter wheat crop planted last month is coming up nicely.
However, the wheat acreage is down a little and farmers are still planting wheat, hoping there is still sufficient warmth for the crop to grown enough to survive the winter, he said.