Robert BaillieulNEW YORK ( Insider Monkey) -- Severe drought and record heat is wreaking havoc on the Midwest's food harvest. Lower farm yields and dwindling inventories have resulted in a 50% surge in corn prices over the past month with little relief in sight. But record food prices have created a boom for agricultural chemical companies. The sector is up 13% in the last month with traders are betting that higher food prices will boost demand for fertilizers. The rally in the agricultural space has attracted the attention of institutional investors. Here are the top four fertilizer plays hedge funds are betting on: Mosaic ( MOS): On July 17, Mosaic reported fourth-quarter earnings. The company beat the Street's expectations by reporting earnings per share of $1.19. Earnings fell 18% year over year due to weaker demand for potash and other agricultural products, but management provided an optimistic industry outlook, stating that farmers will "have their foot on the accelerator" with regards to producing more grain due to record high agricultural prices. With a forward price-to-earnings ratio of 10.6, Mosaic is valued at a premium compared to its peers. With an estimated five-year EPS growth rate of 8%, the stock trades at a rich 1.3 P/E-to-growth ratio, or PEG. However, Mosaic has the highest dividend yield in the industry at 1.75%. In addition, several hedge funds have been building positions in Mosaic. Michael Kaufman at MAK Capital One doubled the size of his position during the first quarter, bringing his total stake in the company to $77 million. Richard Chilton at Chilton Investment Company increased his position by 30%, bringing his stake in the fertilizer company to $102 million. Billionaires Ken Fisher and Steven Cohen are also among Mosaic shareholders. (See Steve Cohen's top stock picks at Insider Monkey.) CF Industries Holdings ( CF): CF Industries has been one the top performers in the fertilizer space. The stock is up 200% over the past five years and has returned 14% in the last month. The company reported record profits during the first quarter, posting an impressive 54% year-over-year increase in earnings to $5.54 a share. CF Industries is the cheapest stock in the fertilizer space, trading at a forward P/E of 8.3. The stock also has the lowest dividend yield in the industry at 0.81%.