Many Indiana farmers who had been worrying about a late summer drought are now looking forward to some extra spending money thanks to high grain prices, which a Purdue University farm analyst expects will boost the state's farm income about 25 percent this year.

Indiana's 2010 farm income should top $3 billion, about a half-billion dollars higher than last year and just below 2008's record of $3.2 billion, said Purdue agricultural economist Chris Hurt.

He said grain prices currently are "extraordinarily high" and being driven by strong global demand for American grains. Soybeans currently are priced at about $13 a bushel, with corn about $5.75 a bushel, Hurt said.

"The crop producers are excited. These are good times for crop incomes," he said.

U.S. Department of Agriculture crop production estimates released Tuesday show Indiana farmers are expected to harvest about 918.4 million bushels of corn and 266.5 million bushels of soybeans this year.

Indiana farmers are virtually done harvesting those crops following a drought that cut some yields but allowed producers to bring in crops at near-record prices this fall.

Hurt said the drought had a minimal impact on Indiana's crops because good weather allowed farmers to plant their fields early and then plentiful rain between May and July infused soils with moisture that sustained crops during the drought that followed.

Some farmers will spend part of the extra income they expect to get this year on big purchases such as farm equipment, reducing their debt or long-delayed projects, he said.

"When there's good income the barn gets painted that hasn't been painted in years. Or maybe they'll trade up their pickup truck," Hurt said.

But many farmers won't be able to fully capitalize on the current high grain prices because they sold part of their crop on advance contract at locked-in prices, said Mike Baise, strategic issue coordinator for Indiana Farm Bureau.

He said banks that loan farmers money to help plant crops in the spring typically encourage such contracts to increase the chances they'll be paid back.

"A lot of the farmers are using somebody else's money to put in the crop. It's placing a bet really, whether you want to gamble on the markets going up or down," Baise said.

Tom Gasper, who farms about 3,700 acres of corn and soybeans in south-central Indiana's Jennings County with two of his brothers, said they sold some of their crop on contract earlier this year before grain prices rose.

But they'll be able to sell the remainder at the current higher prices.

Gasper said the drought has cut his corn yields about 25 percent below average. He's expecting higher income this year, but said rising costs of fertilizer and of rented cropland will eat much of it up.

"Whatever extra money we get this year is going to go right back into the inflated fertilizer costs and the land costs for next year. The bulk of it will," he said.