Well, here we go again.

It's time to play "crop roulette," where your neighborhood farmer tries to figure out what he wants to plant next year, based on what happened this year and what might happen next. If you live in Manhattan, you'll have to play the home game.

Each year about this time, farmers take a look around at how their crops are progressing—what's working or not working with their current crops. Bloomberg reported on the trend here. They put their fingers in the wind and try and figure out how they'll plant next time around. Now, some farmers in the corn belt or bread basket of America don't have to do much figuring. They pretty much plant what they have always planted. But there are many farmers who get creative with their acreage in order to cash in on market trends. The problem is that they have to guess which way the market is heading—just like the rest of us do.

This past growing season was heavily influenced by Washington shouting ETHANOL from the rooftops, which, combined with the late winter showing, created the highest price for corn we've seen in 10 years. The result was that a record 92.9 million acres of corn were planted, up 19% from 2006 and 14% higher than 2005. All those acres came from somewhere: wheat and soy plantings were down. Soy, in fact, was down 15% from 2006, making it the lowest planting and harvesting year since 1995. As a result of these shifts, plus Mother Nature's meddling, soybean prices have risen 75% and wheat prices have more than doubled. With prices like these and all the talk of agflation and rising food prices (e.g., bread just got pricey), less corn may be planted in 2008 in favor of these now-more-profitable crops.

But as any investor will tell you, past performance is no guarantee of future results.

Yes, wheat, corn and soybeans have hit atmospheric highs this year—corn peaked over $4 in March, soy crept up on $10 in July, and wheat peaked this September. So farmers are facing extremely tough decisions about where to make their bets. The coming year is sure to be volatile, and so the planting reports are going to be more important than ever

Separating the hype from reality is always difficult, and it will be interesting to watch the push-me-pull-you quality of crop planting reports on price as the winter wheat is sown between now and November. As an investor, keeping track of all the data when investing in Ags can be challenging. Your best friend is the crop report, but you have to pay attention: Most of the interesting stuff—winter wheat seedings, prospective plantings—that all comes out as supplements, and it's easy to be a day late (and a dollar short) if you're not paying attention.

Corn Rises as U.S. Farmers May Curb 2008 Planting to Sow Wheat Bloomberg September 19, 2007
Facing price surge, USDA mulls conservation shift Reuters September 11, 2007