It's no secret that the price of wheat has skyrocketed during the past year.

During last summer's rally, wheat moved from near $4 per bushel to more than $9 amid stories that Australia and Europe were having poor weather and supplies were dwindling. That worry about supply has not disappeared and this week, fresh bullish news was thrown on top.

On Monday afternoon, several key winter wheat growing states disclosed their wheat's condition ratings for the week. Of the seven states reporting, only one showed an improvement in its rating. The key states of Oklahoma, Texas and Kansas had declines of 3, 4 and 5 percent, respectively. If these states do not have a very good harvest this spring, wheat inventories may not increase enough to sustain both domestic and export demand.

On Tuesday, Canada announced its wheat inventory levels were lower than expected, further exacerbating the supply worries. Wednesday saw a large wheat purchase by Egypt, not uncommon, but very bullish considering the record high prices. The final piece of bullish data came out on Thursday as USDA announced continued strong export sales of wheat, despite record prices. Huge export sales in the past few months are expected to prompt USDA to revise its export estimates higher and its inventory estimates lower on Friday morning when it releases its supply and demand estimates. The report is sure to be a market mover for grains, especially if it contains any surprises. Even without Friday's report, the news on the week was so bullish that wheat touched or settled higher by its exchange imposed limit of 30 cents every day this week.

Wheat settled 30 cents higher both Monday and Tuesday, while it locked limit up on Wednesday without trading a single contract. Wheat was up another 30 cents by midday Thursday and had risen $1.20 per bushel on the week, a gain of 12.7 percent in just four days.

While wheat makes for an interesting headline, it appears to be part of a larger trend in recent days where investors are seeking a safe haven from stock market volatility by buying hard goods like gold and grains. These hard assets seemingly have replaced the old safe haven of bonds as bond prices have been falling along with the stock market indexes in recent trading sessions.

The rise in commodity prices also is unusual in the face of a strong recovery in the dollar in the last week. Because commodities are priced in dollars, a stronger dollar makes commodities more expensive for foreign buyers. This phenomenon worked to push commodity prices like gold, oil, and corn higher all of last summer as the dollar was falling, but doesn't seem to be reversing as the dollar strengthens. This could be attributed to inflation fears.

As the Federal Reserve has been lowering domestic interest rates and the Bank of England has been cutting U.K. interest rates, investors may be concerned about the risk of higher inflation. A good way to combat rising inflation is to own hard assets as they tend to rise in price along with inflation. It is too soon to tell if commodity prices will continue to soar, especially if the dollar continues to strengthen, but it will be interesting to see if investors continue to buy hard assets as a new safe haven against stock market volatility and the potential for rising inflation.

Opinions expressed solely are those of the writer. Walt Breitinger is vice president of commodities at A.G. Edwards and Sons. He can be reached at (219) 738-6460.