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Corn prices hit record as crops shrivel

July 31, 2012: 9:55 AM ET

Click the chart to check prices of corn, soybeans and other commodities.

Corn prices surged to a new record high Tuesday, as the worst drought in more than 50 years continues to plague more than half the country.

Almost 90% of the United States' corn crops are in drought ravaged areas, according to the U.S. Department of Agriculture, and nearly 40% are situated in the hardest hit spots.

Corn prices have soared more than 50% during the past six weeks as the crops continue to shrivel in relentless dry heat throughout the Midwest. They jumped another 0.7% Tuesday to a record high of $8.20 per bushel on the Chicago Board of Trade.

The Teucrium Corn ETF (CORN), which tracks a basket corn futures contracts and is up more than 44% over the past six weeks, slipped slightly on Tuesday.

Soybean prices, which are up more than 20% in recent weeks, also advanced. Prices rose 1% Tuesday to $16.63 per bushel, the highest since July 23. The Teucrium Soybean ETF (SOYB) gained slightly.

Soybean prices will likely continue to rise as the heat lingers in the area where soybeans are the major crop.

"Soybeans are second only to corn as the biggest agricultural product in the Midwest," said Alex Sosnowski, expert senior Meteorologist at AccuWeather.com. "While episodes of rain will continue over some agricultural areas in the Upper Midwest, Ohio Valley and East in the coming weeks, part of primary soybean growing areas will continue to be slammed by heat and drought."

Related: Get ready to pay more for your steak

Sosnowski notes that the next few weeks are crucial for soybeans. From now through mid-August is when soybeans finish their flowering stage and set pods, so mid-August is considered the cut-off for soybeans to receive rainfall without having a serious impact on production. Without rain, soybean yields are likely to be between 10% and 15% lower than the USDA had originally projected.

Prices for wheat, another grain, have also been rising on the back of corn and soybean prices.  But on Tuesday, prices for wheat futures fell slightly, and the Teucrium Wheat ETF (WEAT) also dipped.

The iPath Dow Jones-UBS Grains Total Return Sub-Index ETN (JJG), which tracks the price of corn, soybeans and wheat, was slightly lower.

As the drought continues to spread, and grain prices keep climbing, consumers may be squeezed at the grocery store, since higher corn and soybean prices lead to higher prices for beef, chicken, vegetable oil and other staples.

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