The good news came earlier this week as USDA released its weekly crop progress report that indicated that 72% of the corn crop was in "Good" or "Excellent" condition, better than last week's 70% as well as last year's 61%.

The not-so-good news is corn prices declined 2% over the past week and are 48% below year ago levels. Soybean prices increased 6% over the past week but are down 24% year-over-year. Wheat prices also declined 3% over the past week and are down 37% year-over-year.

"Although down from the prior year, we note that corn, soybean and wheat prices remain well above historical averages, and farmers are expected to remain profitable in 2009," says Henry Kirn, analyst for UBS Investment Research, in a note to investors.

"That said, we believe there is a risk that farm profitability in 2009 will be lower than in 2008 or 2007. Reduced farm profitability, coupled with above trendline farm equipment sales over the past few years, could lead to lower North American ag equipment demand in 2010," he adds.